India-US Rift: A Portent?

THE United States last year turned its trade guns on India, one of the world's most protected and planned economies. With the GATT trade talks imperiled, Carla Hills, the American trade representative, says such skirmishes could intensify as the US tries to pry open individual markets on its own.

Peeved by roadblocks to its investment, the US cited India for unfair trade practices under the Super 301 provision in US trade law. Although the US finally backed off to give India more time, the standoff remains.

The US also could pursue protectionist textile legislation that Congress narrowly failed to pass this fall. That could hurt India and other developing nations.

But developed and developing countries can't agree on how to ease obstacles to foreign investment. Despite this, the US has become the biggest foreign investor in India and a major trading partner.

Last year, when India was one of three nations cited under Super 301, one US complaint was India's opposition to US insurance firms and other service companies. Insurance and other services in India are nationalized.

Another concern remains lax protection for patents and copyrights and widespread piracy by Indian firms. India opposes more stringent safeguards, known as intellectual property rights, saying they will give foreign firms a monopoly. Critics say the argument is blocking needed investment in industries such as pharmaceuticals and computer software where such protection is crucial.