Recent news that India’s Supreme Court denied the biopharmaceutical company Novartis a patent for a major cancer drug sent shock waves through the international trade community, as it signified the latest disturbing development in a series of protectionist actions by India’s government.
For U.S. manufacturers, workers and innovators alike, it’s a sign of what’s to come if India is bent on pursuing this kind of overt protectionism. Not only will we continue to lose access to one of the world’s largest markets, but more Americans will lose their jobs and our economic well-being will suffer. It is time for Congress and the Obama administration to act to ensure that doesn’t happen.
The patent denial just the latest in a series of blatant intellectual property violations meant to bolster India’s domestic industries at the expense of the outside world. Congress, to its credit, has taken notice. A recent House Ways and Means Trade Subcommittee hearing shone a light on how India has been systematically shutting innovators out of its marketplace, with committee members signaling increasing frustrations with India’s behavior. In the Senate Finance Committee’s hearing on President Barack Obama’s trade priorities, Republicans and Democrats alike spoke of the growing problems the U.S. faces with India and questioned acting U.S. Trade Representative Demetrios Marantis on what the administration is doing about it.
They’re right to be concerned. But on such an important issue that directly affects American jobs, something more than rhetoric is needed. While the USTR is pondering what, if any, action to take on India, Congress should consider our past mistakes on trade issues, remember that free trade works only if all parties play by the same rules, and work toward finding solutions to this growing problem.
Perhaps recognizing that it is far too valuable a diplomatic ally for the U.S. to make any real waves on the trade front, India has taken increasing liberties with international law at our expense. Essentially, India is angling for short-term gains that benefit a few local companies but also severely curtail imports, hurting Indian consumers and American jobs in the process.
Case in point: While exports of Indian drugs to the United States are booming, India routinely has undermined trade rules in order to bolster its pharmaceutical industry at our expense. When India closes markets to the U.S., a domino effect ensues whereby Indian patients no longer have access to the newest medicines, innovation is stifled and jobs that rely on research and development eventually will be lost. And in the tech sector, although India has profited greatly from a strong information technology software and services industry, it is now pursuing an anti-competitive trade agenda that effectively locks U.S. firms out and risks stifling its own economic growth in the process.
Having advocated for American workers for decades, I am concerned that we already have lost too many jobs to India through outsourcing. We cannot allow innovation to fall by the wayside and good jobs to disappear. In the 21st century, intangible assets such as intellectual property comprise an ever-increasing proportion of corporate assets. In 2010, IP-intensive industries accounted for about $5.06 trillion in value added to the U.S. economy, comprising roughly 35 percent of our gross domestic product. And IP-intensive jobs also pay better, yet another reason for the U.S. to take a stand now and let the world know that we will not tolerate losing more American jobs to countries that don’t honor their international commitments.
Congress must get involved and either force the administration’s hand to utilize platforms such as the WTO or bilateral negotiations, or pursue legislative angles to convince the Indian government that it’s in their best interest (and the global economy’s interest) to play by the rules. The Novartis decision should be a wake-up call. If we ignore it, we need to be ready to accept the economic consequences – only then, it will be too little, too late.
Ron Klink is a former Democratic member of Congress from Pennsylvania and a senior policy adviser at Nelson Mullins.