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FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 7980
INFO RHEHAAA/WHITE HOUSE WASHDC IMMEDIATE
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
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RUEHBJ/AMEMBASSY BEIJING 7948

UNCLAS SECTION 01 OF 04 NEW DELHI 001902 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR SCA/INSB AND EEB 
USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD 
DEPT PASS TO USTR MDELANEY/CLILIENFELD/AADLER 
DEPT PASS TO SBA FOR INTERNATIONAL 
USDA PASS FAS/OCRA/RADLER/BEAN/FERUS 
 
E.O. 12958: N/A 
TAGS: ETRD EINV EAGR EFIN CVIS KGHG ECPS PREL IN
SUBJECT: DUSTR Marantis Visit to Re-energize Trade Policy Forum 
Government Meetings 
 
(U) THIS REPORT IS SENSITIVE BUT UNCLASSIFIED.  FOR U.S. GOVERNMENT 
USE ONLY; NOT FOR INTERNET DISTRIBUTION. 
 
¶1. (SBU) Summary:  Deputy U.S. Trade Representative (DUSTR) 
Demetrios Marantis visited New Delhi August 11-13 to meet with GOI 
officials and private sector representatives to prepare for USTR 
Ambassador Kirk's participation in a bilaterl Trade Policy Forum 
(TPF) ministerial in Delhi later this fall (subsequently confirmed 
for October 26).  GOI officials stressed the need to focus on a few 
issues per sub-group where both sides could press for resolution 
before the next TPF, the need to select participants in and 
establish an agenda for the CEO Forum, and India's goals for the 
September 3-4 Doha mini-ministerial.  They also called for the 
avoidance of protectionism in the United States and stressed the 
benefits of economic cooperation with India, made a pitch for 
India's continued benefits under the U.S. Generalized System of 
Preferences (GSP) program, and raised many long-standing issues, 
including H1-B visas and social security totalization.  Marantis' 
visit coincided with visits to Mumbai and Delhi of a Senate Foreign 
Relations Committee staffdel focused on India's use of GSP 
(septels), with which he met informally, and the first round of 
Bilateral Investment Treaty (BIT) talks in Delhi, for which he 
delivered concluding remarks (septel).  End Summary. 
 
¶2. (SBU) During his visit, DUSTR Marantis met with Deputy Chairman 
of the Planning Commission Montek Ahluwalia; Ministry of External 
Affairs Secretary Nirupina Rao; Minister of Commerce and Industry 
Anand Sharma and Commerce Secretary Rahul Khullar; and Ministry of 
Micro, Small and Medium Enterprises Secretary Dinesh Rai.  Private 
sector meetings will be reported septel.  DUSTR Marantis was 
accompanied to all meetings by USTR South Asia Director Adina Adler 
and Econoff.  Econ M/C and Deputy M/C, accompanied to several 
meetings, and FCS SCO accompanied to the meeting with Secretary 
Khullar. 
 
Re-energizing the Trade Policy Forum 
------------------------------------ 
 
¶3. (SBU) In a meeting with Commerce Secretary Rahul Khullar, joined 
by the Joint Secretaries for Americas, WTO, Services, Agriculture 
and NAMA, DUSTR Marantis explained Ambassador Kirk and Minister 
Sharma's common desire (as discussed during Sharma's visit to 
Washington in June) for the TPF to both be a mechanism for resolving 
thorny issues and collaborating in new areas.  Khullar also referred 
to a letter which had been sent by AUSTR Mike Delaney to Joint 
Secretary Anil Mukim suggesting some possible modifications. 
Khullar was enthusiastic about convening a TPF ministerial and 
wanted to focus the agenda on a few achievable issues per focus 
group rather than just a long laundry list of intractable ones.  He 
looked forward to receiving more details on USTR proposals to 
strengthen the effectiveness of the TPF and the Private Sector 
Advisory Group (PSAG), and agreed to intervene with the Ministry of 
Agriculture to reengage in the Agriculture Focus Group and ensure an 
appropriate GOI counterpart to USDA U/S James Miller. (Note: Mukim 
confirmed in an August 28 meeting with visiting Commerce DAS Holly 
Vineyard that Additional Secretary Shri Pati would lead the group on 
the Indian side.  End note.) 
 
¶4. (SBU) GOI feedback on specific USTR proposals: 
 
--Combine the Services and Investment Focus Groups:  Khullar said he 
preferred to get the investment group active first and look at 
merging the groups later.  While the U.S. lead would be the same for 
both (AUSTR for Services and Investment Christine Bliss), India's 
side would not (J/S Bharti Sihag for Services, and a Department of 
Industrial Policy & Promotion or Finance Ministry J/S for 
Investment), creating an internal turf battle. Regarding U.S.-India 
collaboration on specific service sector market access issues, J/S 
Sihag said real progress on most sectors, such as retail, would be 
difficult since it would require legislation.  She believed 
education and health services to be outside her scope, but she 
committed to discussing these issues with AUSTR Bliss. 
 
--Create Additional Focus Groups:  DUSTR Marantis proposed 
additional Focus Groups, such as on small and medium enterprise 
(SME) development and environment/clean energy.  Khullar said adding 
 
NEW DELHI 00001902  002 OF 004 
 
 
more groups simply would add confusion, as work would cross over 
into other line departments.  For example, environmental issues 
would be covered by India's Ministry of New and Renewable Energy and 
Ministry of Power.  Khullar also wanted to avoid the TPF being 
caught up in controversy over cap and trade.  Regarding possible SME 
work, Khullar requested USTR send him a proposal. 
 
--Revamp the Private Sector Advisory Group (PSAG):  DUSTR Marantis 
said USTR was looking at reformulating the U.S. side, including 
adding West Coast representatives to make the PSAG more 
geographically-balanced, and would soon share details with the GOI. 
He also proposed creating a formal link between the PSAG and CEO 
Forum to improve follow-through.  Khullar said it would be an 
"institutional nightmareQ if the PSAG were formally linked to the 
CEO Forum; neither could be subordinate to the other and the CEO 
forum was a "hoity-toityQ gathering whereas the TPF was much more 
practical.  However, he agreed that both PSAGs could exchange the 
studies they had concluded but not yet shared, and then he would 
consider discussing the linkage idea with Deputy Chairman Ahluwalia 
-- or we could unilaterally create an informal link.  (Note: In a 
separate meeting, Alhuwalia, noting that his wife, a think tank 
chair, was a member of the Indian PSAG, told DUSTR Marantis he was 
not sure the CEOs would be comfortable with any link to the "think 
tank natureQ of the PSAG.  DUSTR told Ahluwalia that the U.S.-EU 
transatlantic business dialogue could be a model.  MEA J/S Gaitri 
Kumar supported the idea that the PSAG and TPF could help to push 
forward the work of the CEO Forum throughout the year, but Ahluwalia 
remained skeptical, saying the CEO Forum was more of a photo op. 
End Note.) 
 
--Creating an Annual Work Plan:  DUSTR Marantis proposed that the 
United States and India agree to sign a "Bilateral Cooperation 
Agreement,Q essentially a non-binding, "aspirationalQ work plan that 
would set specific goals with timelines for the TPF.  Mukim and 
Khullar welcomed the idea and asked USTR for a proposed outline of 
such an agreement, noting that they would be able to finalize terms 
of reference for such an agreement through an internal process 
called a "Joint Consultative Mechanism. 
Cooperating on Trade Bilaterally and Multilaterally 
--------------------------------------------- ------ 
 
¶5. (SBU) Commerce Minister Sharma explained that the intention of 
the September 3-4 Doha mini-ministerial was to generate a "rainbow 
coalitionQ of countries whose positive message would carry forward 
to the G-20 summit in Pittsburg.  He said he hoped USTR Kirk would 
visit India both for the mini-ministerial and the TPF.  DUSTR 
Marantis noted that at times, our bilateral trade relationship had 
been so dominated by Doha that it often overshadowed the dynamic 
bilateral collaboration between the U.S. and Indian private sectors. 
 Sharma said he did not subscribe to the negative perceptions 
regarding Doha, adding that it was natural that two large 
democracies would have differences of opinion; otherwise there would 
be no need to talk.  He opined that the Doha mandate for development 
was the core goal.  DUSTR stressed that multilateral and bilateral 
tracks were both important.  Sharma said now was the time to reach 
out and not look inward; protectionism would deepen the recession 
and delay the recovery. 
 
¶6. (SBU) Minister Sharma also raised the importance of H1-B visas 
and India's GSP exports, commenting that China would move in if 
India lost GSP.  DUSTR Marantis explained that the Congressional 
review of U.S. trade preference programs was likely to spill over 
into 2010 since difficult questions would be raised on eligibility 
requirements such as rules of origin and taking into consideration a 
country's level of development.  He acknowledged that India's 
situation was complex because it had both highly developed and less 
developed sectors.  Sharma asked for U.S. sensitivity of sectors 
like gems and jewelry that were labor intensive and employed 
low-skilled workers.  Sharma noted he would be in Washington in 
October and might try to meet with some members of Congress on the 
GSP program during his visit.  (Note: we later confirmed with his 
staff that Sharma plans to attend the October 13-14 Coalition of 
Service Industries Global Services Summit in Washington, DC.  End 
note.) 
 
Foreign Secretary -- Trade and Investment Important 
 
NEW DELHI 00001902  003 OF 004 
 
 
--------------------------------------------- ------ 
 
¶7. (SBU) Foreign Secretary Nirupama Rao and Joint Secretary Gaitri 
Kumar told DUSTR Marantis, along with DCM and Econ M/C, that trade 
and economics are the central pillar of our partnership.  Rao said 
we should be ambitious about the relationship and use the CEO Forum 
as a catalyst.  India had submitted a list of CEO names for approval 
after instituting a process less ad hoc than in the past.  DUSTR 
Marantis said he would like to establish a link between the PSAG and 
CEO Forum that would inform the CEO Forum of TPF activities.  Both 
agreed that conclusion of a BIT would bring our economies closer 
together.  DUSTR Marantis also expressed appreciation for the 
Ministry's role in securing the Technology Safeguards Agreement and 
looked forward to getting work started on a Commercial Space Launch 
Agreement (CSLA). 
 
¶8. (SBU) Rao commented that U.S.-India bilateral trade was $70 
billion in 2008, including trade in services.  (Note: this is 
according to Indian data; U.S. 2008 services data is not yet 
available.)  Drawing on her recent posting as Indian Ambassador to 
China, Rao said India-China two-way trade was $51.8 billion last 
year, but trade figures had dropped due to the global recession, 
which had badly affected China.  India has a trade deficit with 
China, exporting primarily commodities to China while importing 
major hardware.  Rao commented that the anti-dumping cases and 
countervailing duties that India has levied against China have 
raised the decibel level in bilateral discussions; a joint economic 
group at the Secretary-level meets only every three years.  Turning 
to a perennial trade topic, Rao stressed that on social security 
totalization, "we need to sort that out.Q  DUSTR Marantis explained 
candidly that the U.S. and Indian systems are not compatible, which 
makes a totalization agreement impossible under U.S. law.  He agreed 
to continue to consider options. 
 
Plannng Commission on CEO Forum and Totalization 
--------------------------------------------- ---- 
 
¶9. (SBU) DUSTR outlined his visit to India for Deputy Chairman of 
the Planning Commission Montek Singh Ahluwalia, who was joined by 
MEA Joint Secretary Gaitri Kumar.  Ahluwalia recommended DUSTR 
Marantis visit a farm in India, as the unique characteristics of 
India's agricultural sector are a big part of India's position in 
the Doha round.  Ahluwalia asked about the BIT negotiations, the 
first round of which Ambassador Marantis reported had been concluded 
earlier that day.  Ahluwalia also raised social security 
totalization (comment: at J/S Kumar's prodding), asking if the 
United States would consider an arrangement similar to that which it 
has with Israel.  DUSTR Marantis explained that there are no groups 
in the United States exempt from the tax and the USG was trying to 
think creatively about how to work with India on this issue. 
Perhaps, once India implements its new system of pension reform, 
there would be a greater possibility, he added.  Regarding the CEO 
Forum, Ahluwalia said it would be important for the CEOs to craft an 
agenda well ahead of the PM's November visit to the United States. 
In response to questions about the process to select U.S. 
participants, Adler explained the Federal Register process (Note: 
published on September 10.  End note) and DUSTR Marantis agreed to 
convey to Washington agencies the desire to constitute an agenda 
soon.  Kumar said it would help for the two leaders to sanction a 
list of concrete deliverables on which both sides could focus. 
 
SME Cooperation Promising 
------------------------- 
 
¶10. (SBU) Secretary Dinesh Rai and Joint Secretary Pravir Kumar of 
Ministry of Micro, Small, and Medium Enterprises Ministry described 
their role creating an enabling environment for SME growth, 
including skills development and banking links.  They explained that 
GSP had helped artisans, and they requested it not be withdrawn. 
DUSTR Marantis explained the status of the program and the review 
process.  Rai referred to a letter of intent that his ministry had 
signed with the U.S. Small Business Administration (SBA) in January 
2007 for one year of cooperation and said he would like to extend 
that agreement and broaden cooperation with the SBA.  DUSTR Marantis 
said his staff would consult with SBA and get back to Rai.  H.P. 
Kumar of the National Small Industries Corporation (NSIC), a 
 
NEW DELHI 00001902  004 OF 004 
 
 
government enterprise, noted NSIC had 250,000 SMEs as members, which 
it showcased on its portal (www.nsicindia.com).  He said NSIC would 
like to arrange meetings with U.S. companies.  Secretary Rai 
indicated the National Commission for Enterprises in the Unorganized 
Sector, which had a five-year mandate to study and make 
recommendations for economic development in the informal sector, had 
completed its work and published a report recommending creation of a 
fund for which the Finance Ministry had provided INR 4,000 crore 
(about $8 billion). 
 
¶11. (U) USTR's Adina Adler cleared this cable. 
 
¶12. (U) Visit New Delhi's Classified Website: 
http://www.state.sgov/p/sa/newdelhi. 
 
ROEMER