Are U.S. 'Special'/'super' 301 Trade Provisions-Cum-'I.M.F.' - Conditioned Funding Detrimental to Techno-Economic Sovereignty of Developing Countries? Financial Management Analysis

By Swamy, M. R. Kumara | Journal of Financial Management & Analysis, July-December 2013 | Go to article overview

Are U.S. 'Special'/'super' 301 Trade Provisions-Cum-'I.M.F.' - Conditioned Funding Detrimental to Techno-Economic Sovereignty of Developing Countries? Financial Management Analysis


Swamy, M. R. Kumara, Journal of Financial Management & Analysis


Introduction

MNCs, as problem solvers, by taking advantage of good political risks induce foreign investment led by G-8 countries (like the U.S.A.) with restrictions imposed on the developing countries regarding use of patents, trade-related measures, etc, and force the third-world (G-15/G-20) countries to dance to the tune set by the rich countries.

Special/Super 301 Trade Provisions

According to the U.S. Trade Representative, Americans who engage in international trade are very concerned about the harm to U.S. trading interests that results from the lack of adequate and effective protection of intellectual property rights in many foreign markets. U.S. businesses are losing money but more importantly the U.S. economy is losing the competitive edge gained from research and development, innovation and creativity. As a nation, the U.S. simply cannot afford it1.

The share of U.S. exports, made up of articles that rely heavily on intellectual property protection (chemicals, pharmaceuticals, computers, software, movies, sound recordings, books, scientific equipment, etc., has more than doubled in the postwar period to over a fourth of total exports. For example, U.S. companies experienced worldwide losses estimated at $43,000 million to $61,000 million in 1986 due to inadequate and ineffective intellectual property protection. U.S. trade policy objectives evolved in the first half of the 1980s to expand their negotiating mandate on intellectual property2.

An entirely new provision - a watered-down version of the Gephardt Amendment, Special/Super 301- - is a direct result of common belief that U.S. business is not getting a fair deal in many parts of the world: it is not a punitive device, but is a leverage to open markets: Special/Super 301 provides general retaliatory authority in cases where foreign practices burden or discriminate against U.S. commerce. According to latest reports, the 1993 trade policy of the U.S. designates Special/ Super 301 as an important tool for opening foreign markets. Although the U.S. Administration has not identified any priority foreign countries under Super 301 Provisions of the Omnibus Trade and Competitiveness Act of 1988, it has, however, retained a Watch list and a Priority Foreign Country (PFC), Watch List of trading partners deserving special mention -Brazil, India, the People's Republic of China and Thailand remain on the Priority Watch List

It may be recalled that in May 1994, the Clinton Administration had threatened action against India under 'Special/Super 301' suspending duty-free treatment on some imports from India in retaliation for India's alleged violations of U.S., intellectual property rights which sought to affect trade worth US $60 million from India primarily in chemicals and pharmaceuticals. According to latest reports, li ing India a PFC under the Obama Administration would trigger a formal investigation under the broader Section 301 Programme to determine unilateral sanctions, more specifically about local content and technology transfer requirements and could cover wide ranging sectors including agriculture, bio-technology and pharma etc., threatening India with sanctions over its patent law, patent examination and court decisions in the patentability of medicines. All these have to be viewed in the light of India's recent enactment and implementation of its Patent Law (Section 3D) which is fully in line with the World Trade Organization (WTO) agreement on Trade and Related Aspects of Intellectual Property Rights (TRIMS)3.

Investment Barriers : Indian Government policies and practices severely restrict potential U.S. investment and impose onerous conditions on those U.S. companies that do invest in India. Foreign investment where allowed must serve narrowly-defined national goals. Government approval is required for all new or expanded foreign investment based upon the foreign equity component and the project's contribution to technology transfer, local sourcing, exports, employment and location. …

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