Interview | Kenneth I. Juster

‘US Believes India Can Play a Role in Increasing Stability in Asia’

Kenneth I. Juster The recently named US ambassador to India, Kenneth I. Juster was the Under Secretary of Commerce, when the US lifted sanctions imposed on India following the 1998 nuclear tests. Considered a friend of India among the mandarins of the Indian foreign office, Juster had been a regular visitor to India. A die-hard optimist, at that time, Juster was in charge of the Bureau of Industry and Security, which sought to advance US national security, foreign policy, and economic interests. The Bureau also oversaw issues at the intersection of business and national security, including strategic trade controls, imports and foreign acquisitions that affected US security, enforcement of anti-boycott laws, industry compliance with international arms control agreements, and critical infrastructure protection. On a visit to India to deliver a keynote address at Indo-US Space Conference in Bangalore, in July 2004, Juster spoke exclusively with FORCE editor Pravin Sawhney about the future of Indo-US trade relations in the area of high technology exchanges. We reproduce the interview.

 

What was the purpose of your visit to India?

There were two purposes for my current visit. One was to deliver the keynote address at the Indo-US Space Conference in Bangalore. The goal of the conference is to encourage interaction and collaboration between our two governments and industries on civil space and high technology matters. The participation of a large number of US delegates speaks of the transformation of our relationship. The second purpose was to come to New Delhi to meet with representatives of the new government, including the Prime Minister’s National Security Advisor, to review the progress that has been made in the high technology trade relationship.

 

What is the difference between the High Technology Cooperation Group (HTCG) which was set up between India and the US about two years ago, and the January 2004 Next Steps in Strategic Partnership (NSSP)? In which of the two areas do you see more forward movement and why?

The High Technology Cooperation Group was established in November 2002. It provides a standing framework for the United States and India to discuss ways to increase high technology trade. Our two governments have agreed that the HTCG will have two primary and interrelated substantive components. One component is facilitating and promoting high technology trade generally, and focuses on cooperative steps that our two countries can take to create the appropriate economic, legal, and structural environments that are necessary for successful high technology commerce. The second component is building confidence for additional strategic trade, and focuses on discussing ways to enhance trade between the United States and India in sophisticated goods and technologies, while also working cooperatively to address proliferation concerns and strengthen national export control systems.

The High Technology Cooperation Group formulated a ‘Statement of Principles for US-India High Technology Commerce’ in February 2003 that sets forth the basis for strengthening bilateral high-technology commerce. Our Group has met in full on two occasions, each preceded by a one-day conference among private sector representatives from various high-tech industries in both countries. Since the formation of the High Technology Cooperation Group, the value of the most sophisticated US high technology trade with India has increased dramatically. We look forward to continuing the work of the HTCG with the new government.

The Next Steps in Strategic Partnership is a separate but related initiative that focuses on how the United States and India can expand cooperation in three specific areas: civilian space programmes, civilian nuclear activities, and high-technology trade. In addition, as part of the NSSP, our two countries have agreed to expand our dialogue on missile defence. The proposed cooperation under the NSSP will progress through a series of reciprocal steps that will build on each other. It will include expanded engagement on nuclear regulatory and safety issues and missile defence, ways to enhance cooperation and peaceful uses of space technology, and steps to create the appropriate environment for successful high technology commerce. In order to combat the proliferation of weapons of mass destruction, relevant laws, regulations, and procedures will be strengthened, and measures to increase bilateral and international cooperation in this area will be employed.

In some respects, the NSSP builds and expands upon the work being done in the High Technology Cooperation Group. The HTCG set up a framework for reviewing and analysing how high-technology commerce between the United States and India could be expanded across a broad range of categories, including information technology, biotechnology, nanotechnology, and defence technology. The NSSP builds on some of the analysis undertaken in the HTCG process and addresses more sophisticated technology transfer issues between our two countries – issues that may not necessarily have as broad a commercial impact as the wide spectrum of high-technology trade discussed under the HTCG, but which do have important commercial and political implications.

 

There is a perception here that India desires faster movement on the NSSP, while the US appears to prefer the HTCG, which has a larger component of civilian technology. Unfortunately, even on the subject of defence technology which comes under the HTCG, the progress has been minuscule. How do you explain this?

It is simply incorrect to say that the United States prefers the HTCG to the NSSP. Both are important but separate mechanisms for advancing US-India high-technology trade and cooperation. The NSSP, in particular, is a joint initiative at the Presidential and Prime Ministerial level. The United States places much importance on this initiative and welcomes its progress.

With regard to high-technology commerce generally, there have been dramatic increases in US exports of sophisticated items to India over the past three years including those relating to defence technology. Since the lifting of US sanctions in September 2001, US defence sales to India have totalled more than USD200 million in government-to-government sales. In addition, the Department of State has approved approximately 850 munitions license applications for private sector exports to India, worth more than USD 600 million.

With regard to licensed dual-use trade with India, such trade amounted to approximately USD 27 million in our fiscal year 2002, which covers the period from 1 October 2001 through 30 September 2002. This figure increased to over USD 57 million in fiscal year 2003, and is over USD 50 million for just the first half of fiscal year 2004.

As to the NSSP, United States has already initiated certain elements with the government of India, and is poised to move quickly on other aspects. There have been frequent misstatements in the Indian press that progress on the NSSP has been slowed by the US government bureaucracy. This is simply not the case. We would like to move quickly and very much hope that the new government in India approaches the NSSP in the same manner.

 

What tangible steps should India take on the exports control regime to provide push to bilateral high-technology trade? What exactly is the co-relationship between the two?

Trade and security should be seen as mutually reinforcing activities. A solid foundation for security provides the opportunity for greater access to high-technology trade. Accordingly, one of the key principles of the HTCG is for India and the United States to address proliferation concerns and to strengthen national export control systems through laws, regulations, and enforcement. In short, enhancing export control capabilities will enable greater bilateral high-technology trade.

The United States, of course, recognises that India is not a party to multilateral non-proliferation regimes. But we respectfully submit that India has a stake in the success of those regimes precisely because of the foundation they provide for our joint interest in halting proliferation, and that India would benefit from having an export control system that regulated intangible technology transfers, brokering, goods in transit, re-exports, and other such transactions.

 

What are the advantages of HTCG and NSSP that the private sector can look forward to?

It is the private sectors in the United States and in India that ultimately determine the level of trade and investment between our two countries. That is why the HTCG has held a one-day private sector conference preceding each of its meetings. Each of these conferences has brought together over 100 representatives from the United States and India who are focused on further growth of high-technology commerce in areas such as information technology, life sciences, nanotechnology, and defence technology. The conference attendees have provided specific, practical, and realistic steps as to how high-technology trade can be advanced. In addition, our governments through both the HTCG and the NSSP have established frameworks for enabling increased numbers of commercial transactions.

 

How can the private sector in India help to increase high-technology commerce between India and the US?

The-private-sector in India can help increase high-technology commerce by working with the government of India to identify and generate awareness of market opportunities, lower tariff and nontariff barriers to trade, and build additional confidence in India for such trade. In addition, Indian industry should be aware of Indian export control laws and regulations, and implement strong compliance programmes to ensure that sensitive items are not improperly diverted. This is especially important in light of the increasing private sector involvement in India’s defence sector.

 

Has Pakistan’s lateral proliferation has had an effect on the bilateral HTCG and NSSP between India and the US? How would the latter be affected if India does not sign the Additional Protocol?

Issues relating to Pakistan do not have a direct bearing on either the activities of the High HTCG or on the NSSP. These initiatives are bilateral efforts between the United States and India. Of course, we certainly believe that enhanced US-Indian cooperation can increase stability in Asia.

It is not my practice to discuss specific elements of the NSSP or how various policy issues may or may not relate to the NSSP. I would like to emphasise, however, that nuclear proliferation and nuclear safety are important issues for both our countries. President Bush has urged all states to sign the Additional Protocol in order to strengthen the International Atomic Energy Agency and the global non-proliferation regime more broadly.

 

There is considerable concern in India about China’s proliferation activities. Yet, China has much more high-technology trade with the US than India. Why does this mismatch exist?

The United States actually has a more restrictive export control policy relative to China than it does toward India, and has sanctioned a number of Chinese entities because of concerns about proliferation activities. Moreover, US high-technology exports to China receive extensive interagency review. Nonetheless, the overall level of general US high-technology trade with China exceeds that with India. I think this is due, in part, to steps that the Chinese government has taken to make its domestic environment hospitable to such trade, including improvements in its infrastructure, efforts to lower certain barriers to such trade, and commitments to strengthen the protection of intellectual property rights

 

How does India compare with the US’s overall high-technology/dual-use items commerce with the world? Which are the major countries that are significant importers of these items from the US?

Although US-India trade continues to expand, our high-technology relationship has not yet reached its full potential. Despite its size, India was the 25th largest trading partner with the United States in 2003, with total exports and imports accounting for USD 18 billion.

While US exports to our top 10 trading partners account for approximately 66 per cent of total US exports, our exports to India only account for less than one per cent of total US exports. Moreover, US exports of advanced technology products – including biotechnology, opto-electronics, information and communications, electronics, flexible manufacturing, advanced materials, and aerospace items – lag behind other major trading partners.

It is important to note that US export controls are not the reason why our high-technology trade relationship has yet to reach its full potential. In fact, most exports to India do not require a licence. Licensed trade is only a small percentage of overall US trade with India. In 2003, licensed trade accounted for approximating one per cent of all trade with India. Moreover, of the exports that required a license, the vast majority were approved. In 2003, approximately 90 per cent of license applications were approved, with exports amounting to well over USD 50 million.

Licensed trade to India includes many sophisticated high-technology commodities, such as pressure transducers, chemical manufacturing equipment, integrated circuits, certain microprocessors, analogue to digital converters, capacitors, oscilloscopes, and imaging cameras. Yet, we still have a great deal of room for growth in advanced technology trade.

 

How would you describe the state of India-US relations? Does it have a correlation to bilateral high-technology trade?

During the past few years, we have seen a fundamental transformation in relations between the United States and India. When the Bush Administration issued its National Security Strategy in 2002, we expressly spoke of this transformation and recognised ‘India’s potential to become one of the great democratic powers of the 21st Century.’

The level of cooperation between our two countries over the last few years, across a broad range of issues, has been nothing short of extraordinary. We now consult regularly at senior levels on political, economic, security, and global issues – we share intelligence; we coordinate on law enforcement; we cooperate in counter-terrorism activities; we conduct joint scientific and health projects; we cooperate on space activities and we collaborate on development assistance. We have also greatly enhanced our high-technology trade relationship, with sophisticated high-technology trade from the United States to India increasing dramatically over the last three years. In short, US-India relations have probably never been better. The challenge now is to build on this momentum, so as to deepen and broaden the bilateral relationship. It needs to spread throughout our societies, to the business-to-business and people-to-people levels.

 

The January 2004 NSSP statement mentions that bilateral cooperation and commerce ‘will increase stability in Asia and beyond.’ What does this mean?

The United States looks at India as a major world leader whose influence internationally is important and growing. We believe that India, as the world’s biggest democracy, can play an important role in increasing stability in Asia and beyond. Both countries are committed to defeating terrorism, as both have suffered at the hands of terrorists and recognise the necessity of eliminating such terrorists. We are both committed to preventing the proliferation of weapons of mass destruction and increasingly are cooperating to stop their spread. And we are both working together to promote regional stability in South Asia and regularly discuss mutual concerns in Afghanistan, Nepal, Bangladesh, and Bhutan.

In Asia more broadly, we also share a clear commitment to growth, free trade, prosperity, and regional security. And we believe that enhanced cooperation between our two countries in the areas of high technology, civilian space programme and civilian nuclear activity — as provided in the NSSP — will only enhance the level of cooperation between our two countries.