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Quarterly
Issue: Feb-April 2006
 
   
The Dawn of
A Glorious New Era
By Dev Varam
 
 
 
It was an epoch-making visit by a Head of State. US President George Bush visited India from March 1 to 3, 2006, carrying an agenda that had been worked out in detail for months, covering a vast range of issues, from agriculture to civilian nuclear power, from science and technology to space research, as part of further strengthening the ongoing strategic partnership between India and the United States. It is very obvious that the world's richest and most powerful democracy should reach out to the world's largest democracy, which is also an emerging economic power, as a partner and ally. "India in the 21st century is a natural partner of the United States,” President Bush declared, at the start of his talks with Prime Minister Manmohan Singh. Welcoming President Bush, the Indian Prime Minister pointed that the stand taken by the American leader on the issue of outsourcing cemented the relations between the two countries. But, the Prime Minister added, the farsighted approach helped America retain its edge in the global market. On his part, President Bush was fully aware of the fact that India's 300-million strong middleclass, with increasing purchasing power, provided a huge market for American products. He said the Indo-US relationship was based on the belief that free and fair trade was in the interest of the people of both countries. In a subtle way, this implied that India should further reduce its trade tariffs on its imports that include American goods and services. At a State banquet given in honour of the visiting American leader, Indian President A.P.J. Abdul Kalam referred to the knowledge revolution that began in the United States and said that it had become a powerful force of modernization in Indian society as well. “We also have 540 million youth with a potential of transforming themselves into a global human cadre of a skilled and intellectual work force,” President Kalam added. Which again would be to the advantage of both countries migration of more and more better brains to the US and increased outsourcing work to India. President Bush understood the interdependence of both countries. “The US and India, separated by half the globe are closer than ever before and the partnership between our free nations has the power to transform the world,”
After their extensive talks, President Bush and Prime Minister Singh signed a historic pact on civilian nuclear energy and issued a detailed joint statement, covering a gamut of various other areas of cooperation. But the nuclear pact, which does not hinder India's nuclear weapons production, stood out as the testimony of success, achieved against opposition from several quarters in both the countries. Another significant development was the presentation of a report by the India-US CEOs Forum, laying down the roadmap for an enduring strategic partnership between the two countries. The Forum identified six major areas of cooperation and recommended time-bound specific action in 15 key business sectors covering most economic parameters to boost the two-way trade and investment between both the countries. It was aimed at doubling the bilateral trade to $40 billion in three years from $20 billion as at present, and carrying it out into the future by the same mind-blowing arithmetic leaps and bounds. It is quite possible in view of the vast untapped potential that exists as India accounts for just about one percent of the US imports. President Bush was right when he said: “Our two great democracies are now united by opportunities that can lift our people.” After hammering out a slew of agreements President Bush and Prime Minister Singh knew that they had created history. Standing firmly on ground, they set their sights on the distant horizon that is gathering light. They both know that a glorious new era has begun in the relations between the United States and India.
The Historic N-Pact
 


President Bush and Prime Minister Manmohan Singh have announced an unprecedented agreement that would provide U.S. nuclear power assistance to India without hindering the country's nuclear weapons production.
The agreement has marked a significant break from decades of U.S. nuclear policy, and highlighted the strengthening relationship between the world's most powerful democracy and its largest counterpart. Both leaders declared that Bush's visit was a success.
Under the agreement, India is to separate its civilian and military nuclear programmes over the next eight years in order to gain U.S. expertise and nuclear fuel to meet its rapidly rising energy needs. India's civilian facilities would be subject for the first time to permanent international inspections.
Bush and Singh described the deal, which has been in the works since July 2005, following Singh's visit to Washington, where the two leaders set an agenda for improving India-US cooperation in a number of areas, including Nuclear energy, as an important breakthrough in U.S.-India relations.
"What this agreement says is -- things change, times change, that leadership can make a difference," Bush said at the news conference. "I am trying to think differently, not to stay stuck in the past, and recognize that by thinking differently, particularly on nuclear power, we can achieve some important objectives." Singh said, "We have made history today.”
The deal must clear two large hurdles before it can take effect. Bush must overcome concerns by lawmakers in both parties that the United States is rewarding one of only three countries that refused to sign the 1968 nuclear Non-Proliferation Treaty.
R. Nicholas Burns, the undersecretary of state for political affairs, said that India, unlike Iran and North Korea, earned special treatment from the United States with its commitment to democracy and international inspections. Burns was intensely involved in working out the details of the nuclear pact.
Burns said one of the most crucial aspects of the pact is that India would subject future civilian plants to inspections. "This is a significant gain for nonproliferation purposes and it certainly is far better than the zero influence we had before the deal," he said. India, however, won the right to classify reactors as for either military or civilian use, which could limit inspections.
Mohammed ElBaradei, head of the International Atomic Energy Agency, which would be in charge of the inspections, praised the deal. "It would also bring India closer as an important partner in the nonproliferation regime," he said in a statement issued from his office in Vienna.
For India, which faces dwindling supplies of indigenous uranium, the deal would allow it to import uranium to fuel its civilian program.
Of India's 22 nuclear plants, 14 classified for civilian use would be subject to new and permanent international inspections under the deal. The country's eight other reactors, as well as future ones designated for military use, would be off-limits.
Analysts said the pact was an important part of a White House strategy to accelerate New Delhi's rise as a global power and as a regional counterweight to China.
Bush and Singh also made progress on cementing closer economic ties, including an informal commitment to try to double bilateral trade every three years.
 
U.S-India Joint Statement
A Pledge to boost business climate, investment
 

President George W. Bush and Prime Minister Manmohan Singh have expressed satisfaction with the great progress the United States and India have made in advancing their strategic partnership to meet the global challenges of the 21st century. In a Joint Statement issued at the end of their talks, President Bush and Prime Minister Singh said: “Both our countries are linked by a deep commitment to freedom and democracy; a celebration of national diversity, human creativity and innovation; a quest to expand prosperity and economic opportunity worldwide; and a desire to increase mutual security against the common threats posed by intolerance, terrorism, and the spread of weapons of mass destruction. The successful transformation of the U.S.-India relationship will have a decisive and positive influence on the future international system as it evolves in this new century.” Reviewing the progress made in deepening the global partnership between the United States and India since their Joint Statement of July 18, 2005, the President and the Prime Minister reaffirm their commitment to expand even further the growing ties between their two countries. Consistent with this objective, the two leaders wish to highlight efforts the United States and India are making together in the following areas, where they have:

FOR ECONOMIC PROSPERITY
(1) Agreed to intensify efforts to develop a
bilateral business climate supportive of trade and investment by:


1. Welcoming the report of the U.S.-India CEO Forum, agreeing to consider its recommendations aimed at substantially broadening our bilateral economic relations, and directing the Chairs of the Indo-U.S. Economic Dialogue to follow up expeditiously with the CEO Forum;

2. Endorsing the efforts of the U.S.-India Trade Policy Forum to reduce barriers to trade and investment with the goal of doubling bilateral trade in three years;

3. Agreeing to advance mutually beneficial bilateral trade and investment flows by holding a high-level Public-Private Investment Summit in 2006, continuing efforts to facilitate and promote foreign direct investment and eliminate impediments to it, and enhancing bilateral consultations on various issues including tariff and non-tariff barriers to trade in goods and services, and preventing the illicit use of the financial system.

(2) Sought to expand cooperation in agriculture by:
1. Launching the Knowledge Initiative on Agriculture with a three-year financial commitment to link our universities, technical institutions, and businesses to support agriculture education, joint research, and capacity building projects including in the area of biotechnology.

2. Endorsing an agreed workplan to promote bilateral trade in agriculture through agreements that: lay out a path to open the U.S. market to Indian mangoes, recognize India as having the authority to certify that shipments of Indian products to the United States meet USDA organic standards, and provide for discussions on current regulations affecting trade in fresh fruits and vegetables, poultry and dairy, and almonds.

(3) Reaffirmed their shared commitment to completing the WTO Doha Development Agenda (DDA) before the end of 2006, and agreed to work together to help achieve this outcome.

FOR ENERGY SECURITY AND A CLEAN ENVIRONMENT

(1) Welcomed the successful completion of discussions on India's separation plan and looked forward to the full implementation of the commitments in the July 18, 2005 Joint Statement on nuclear cooperation. This historic accomplishment will permit our countries to move forward towards our common objective of full civil nuclear energy cooperation between India and the United States and between India and the international community as a whole.

(2) Welcomed the participation of India in the ITER initiative on fusion energy as an important further step towards the common goal of full nuclear energy cooperation.

(3) Agreed on India's participation in FutureGen, an international public-private partnership to develop new, commercially viable technology for a clean coal near-zero emission power project. India will contribute funding to the project and participate in the Government Steering Committee of this initiative.

(4) Welcomed the creation of the Asia Pacific Partnership on Clean Development and Climate, which will enable India and the U.S. to work together with other countries in the region to pursue sustainable development and meet increased energy needs while addressing concerns of energy security and climate change. The Partnership will collaborate to promote the development, diffusion, deployment and transfer of cleaner, cost-effective and more efficient technologies and practices.

(5) Welcomed India's interest in the Integrated Ocean Drilling Program, an international marine research endeavor that will contribute to long-term energy solutions such as gas hydrates.

(6) Noting the positive cooperation under the Indo-U.S. Energy Dialogue, highlighted plans to hold joint conferences on topics such as energy efficiency and natural gas, to conduct study missions on renewable energy, to establish a clearing house in India for coal-bed methane/coal-mine methane, and to exchange energy market information.

FOR INNOVATION AND THE KNOWLEDGE ECONOMY

(1) Emphasizing the importance of knowledge partnerships, announced the establishment of a Bi-National Science and Technology Commission which the U.S. and India will co-fund. It will generate collaborative partnerships in science and technology and promote industrial research and development.

(2) Agreed that the United States and India would work together to promote innovation, creativity and technological advancement by providing a vibrant intellectual property rights regime, and to cooperate in the field of intellectual property rights to include capacity building activities, human resource development and public awareness programs.

(3) Agreed to continue exploring further cooperation in civil space, including areas such as space exploration, satellite navigation, and earth science. The United States and India committed to move forward with agreements that will permit the launch of U.S. satellites and satellites containing U.S. components by Indian space launch vehicles, opening up new opportunities for commercial space cooperation between the two countries.

(4) Welcomed the inclusion of two U.S. instruments in the Indian lunar mission Chandrayaan-1. They noted that memoranda of understanding to be signed by ISRO and NASA would be significant steps forward in this area.

(5) Welcomed the U.S. Department of Commerce's plan to create a license exception for items that would otherwise require an export license to end-users in India engaged solely in civilian activities.

FOR GLOBAL SAFETY AND SECURITY

(1) Noted the enhanced counter-terrorism cooperation between the two countries and stressed that terrorism is a global scourge that must be fought and rooted out in every part of the world.

(2) Welcomed the increased cooperation between the United States and India in the defense area, since the New Framework for the U.S.-India Defence Relationship was signed on June 28, 2005, as evidenced by successful joint exercises, expanded defence cooperation and information sharing, and greater opportunities to jointly develop technologies and address security and humanitarian issues.

(3) Reaffirmed their commitment to the protection of the free flow of commerce and to the safety of navigation, and agreed to the conclusion of a Maritime Cooperation Framework to enhance security in the maritime domain, to prevent piracy and other transnational crimes at sea, carry out search and rescue operations, combat marine pollution, respond to natural disasters, address emergent threats and enhance cooperative capabilities, including through logistics support. Both sides are working to finalize a Logistics Support Agreement at the earliest.

(4) Welcomed India's intention to join the Container Security Initiative aimed at making global maritime trade and infrastructure more secure and reducing the risk of shipping containers being used to conceal weapons of mass destruction.

(5) Reiterated their commitment to international efforts to prevent the proliferation of weapons of mass destruction.

(6) Building on the July 2005 Disaster Relief Initiative, noted the important disaster management cooperation and their improved capabilities to respond to disaster situations.

(7) Recognized the importance of capacity building in cyber security and greater cooperation to secure their growing electronic interdependencies, including to protect electronic transactions and critical infrastructure from cybercrime, terrorism and other malicious threats.

DEEPENING DEMOCRACY

(1) Recalled their joint launch of the UN Democracy Fund in September 2005 and offered the experience and expertise of both Governments for capacity building, training and exchanges to third countries that request such assistance to strengthen democratic institutions.

(2) Welcomed the decision of India and the United States to designate a representative to the Government Advisory Board of the International Centre for Democratic Transition (ICDT) located in Budapest to facilitate cooperative activities with ICDT.

(3) Agreed that the Virtual Coordination and Information Centres set up in September 2005 should be further strengthened and a bilateral meeting aimed at developing a practical programme for utilization of its services be held soon.

(4) Expressed satisfaction at the expedited USFDA drug approval processes that strengthen the combat against HIV/AIDS at the global level and encourage greater corporate participation to meet this challenge, including the establishment of the Indo-U.S. Corporate Fund for HIV/AIDS.

(5) Agreed to expand bilateral efforts and continue cooperation in the area of medical research and strengthen technical capacity in food and drug regulation in India as well as address the concern on avian influenza, including agreement to reach out to the private sector, develop regional communications strategies, and plan an in-region containment and response exercise. The President welcomed India's offer to host the International Partnership on Avian and Pandemic Influenza meeting in 2007.

Trade Essential for Economic Growth
 
The Joint Agreement on Trade
India and the United States agree that trade is essential to promoting global economic growth, development, freedom and prosperity. In a joint statement President Bush and Prime Minister Singh said:
We fully share the goal of completing the WTO Doha Development Agenda (DDA) before the end of 2006, and agree to work in partnership to help achieve this outcome.
During our discussions, we agreed to meet the task with ambition, determination and a readiness to contribute, consistent with our roles in global trade, and to keep the development dimension in focus. The system of trading rules to which our two great democracies have contributed immensely must be strengthened. Towards this global cause, we recommit ourselves and invite all key participants to demonstrate their leadership.
We agree that a successful Round depends upon progress in all areas of the negotiations if we are to meet our goal of promoting development through trade. We are committed to a DDA result consistent with the mandates already agreed that realize a substantial outcome in all three pillars of the agriculture negotiations (domestic support, export competition and market access); significant improvements in market opportunities in manufacturing and services; and appropriate disciplines, including transparency of regulatory practices in services. We also believe we should strengthen the rules that facilitate trade, where we have jointly made proposals. Work in all these areas must go hand in hand.
We agree to pursue an ambitious agenda for the first half of 2006,consistent with the important milestones that were set at the Hong Kong Ministerial for agriculture, manufacturing, services and other issues, and continuing to press for the goal of concluding the negotiations by the end of 2006.
We will continue to work to promote reform, respond to the concerns of developing countries, and create opportunities for growth for all. We are building the trading system of the future, where progressive liberalization and reform result in improvement in standards of living for all, in particular for the millions of poor across the developing world.