Obama opens Asian tour with stop, and sales pitch, in India

By Scott Wilson
Washington Post Foreign Service
Sunday, November 7, 2010; A17

MUMBAI - Days after reaping the political consequences of a poor economy, President Obama announced a set of measures Saturday to increase trade between the United States and India, his first stop on an Asian tour focused largely on promoting economic growth at home.

In an address to several hundred American and Indian executives in this historic trading port, Obama said he would make "fundamental reforms" to the export controls that guide trade between the two countries. Administration officials said those include removing several Indian space and defense companies from the entities list, which identifies firms that manufacture products with dual civilian and military purposes and makes it more difficult for them to trade with the United States.

Obama also informed Indian officials that he will support the country's membership to four international alliances responsible for regulating trade in nuclear, chemical, biological and missile technology and materials, including the Nuclear Suppliers Group. Indian leaders have aspired to join, but U.S. nonproliferation groups immediately criticized the move for weakening the world's ability to monitor nuclear trade.

"I'm here because I believe that in our interconnected world, increased commerce between the United States and India can be and will be a win-win proposition for both nations," Obama told the U.S.-India Business Council, drawing applause. "I realize that for some, this truth may not be readily apparent."

Recalling an issue from the midterm campaign trail, Obama said that "there are many Americans whose only experience with trade and globalization has been a shuttered factory or a job that was shipped overseas."

"There still exists a caricature of India as a land of call centers and back offices that cost American jobs," he said. "But these old stereotypes, these old concerns ignore today's reality."

Obama's remarks placed the U.S economy at the center of his first extended foreign trip this year, and highlighted the political challenge he faces in promoting economic policies abroad that divide Americans at home, including many within his own party.

He arrived in India's commercial capital at the end of a week when U.S. voters punished Democrats - and by extension his administration - for failing to move quickly enough to create jobs during a still-staggering recovery.

But his three-day stay in India also follows months of complaint from its leaders, who fear that a relationship that thrived under the previous administration has stagnated under this one. He plans to speak throughout his 10-day trip to four Asian nations about how his foreign policy goals relate directly to U.S. economic interests at home.

To underscore the point, Obama alluded in his speech to a set of newly consummated export contracts, some in the works for months, between American companies and the Indian government and private firms. Administration officials said the deals - including the sale of military transport aircraft, civilian airplanes, mining equipment and jet engines - are worth $10 billion and support 54,000 jobs in the United States.

"A president's visit is an action-forcing event," said Michael Froman, deputy national security adviser for international economic affairs. "It helps concentrate the minds of decision makers."

The jobs equation

Ahead of his arrival, a group of American chief executives here for Obama's visit sought to dispel concerns that India, a fast-growing economy of 1.2 billion people, takes more U.S. jobs than it is likely to generate.

India is not an easy country for American companies to do business in, and Obama raised the issue of inadequate infrastructure and various barriers to trade as problems the Indian government should address.

India's Parliament passed a law this year that, because of strict liability demands, could keep American companies out of India's $150 billion nuclear power market that former president George W. Bush helped open up.

David Cote, chairman and chief executive of Honeywell, said the law is indeed a concern to American business. But he said job creation in the age of globalization is not "a zero-sum game."

Cote said the American public's perception that companies send jobs overseas only to take advantage of lower labor costs is misguided. His company, which manufactures avionics, jet engines and other technical products, operates in India because of the "superior engineering" he said is done here.

"I don't think that's as well understood in the U.S. and the developing world as it should be," said Cote, whose company has 11,000 employees in India.

Push to increase exports

Obama's trip will take him to four Asian democracies - and two economic conferences - important to his goal of doubling U.S. exports in the next five years. He believes the swelling middle-class economies of India, Indonesia, South Korea and Japan could drive future U.S. economic growth, as American consumers retrench after the credit crisis.

India's economy is projected to growth more than 8 percent next year, and U.S. exports have found an avid market in the country's relatively youthful middle class with a taste for American style.

More than 60 percent of India's population is younger than 35, a higher proportion than in some of the largest U.S. trading partners. Obama highlighted Harley-Davidson's decision, for example, to open a plant in India to assemble U.S.-made motorcycles.

"This is going to be a very young country for a long time," said Indra Nooyi, the chairwoman and chief executive of PepsiCo.

India is the world's largest democracy, and administration officials say that, throughout the trip, Obama will emphasize that emerging economies can thrive in democracies in a tacit challenge to China's more authoritarian model of state control.

"Even if it can be slow at times, even if it can be messy, even if, sometimes, the election doesn't turn out as you'd like," Obama said to laughter at the U.S.-India Business Council, "freedom in the political sphere and freedom in the economic sphere go hand in hand."

Obama's decision to support India's membership to the 46-nation Nuclear Suppliers Group is among the clearest indications yet that he has heard some of India's complaints.

The Bush administration deepened U.S.-India relations by signing a civilian nuclear agreement that lifted a three-decade U.S. moratorium on India's nuclear program. The deal, which gave India access to the international market in nuclear fuel, came even though India did not sign the Non-Proliferation Treaty.

Obama has called that treaty essential in preventing the spread of nuclear technology and materials, including to terrorist organizations. Nonproliferation groups condemned Obama's support Saturday for India to join the Nuclear Suppliers Group - established 35 years ago in response to India's first nuclear test - as another undeserved reward that will undermine those goals.

"The move would cause a lot of nonproliferation pain and absolutely no gain," Daryl Kimball, executive director of the Arms Control Association, wrote in an e-mail.

Although the primary focus of Obama's visit here is to improve economic relations, his first stop represented a solemn show of solidarity with the Indian people.

He made his way - first by helicopter, then motorcade - to the Taj Mahal Palace and Tower Hotel. The historic hotel on Mumbai's waterfront was a primary target of the November 2008 terrorist attacks here carried out by a group of men from Pakistan. The gunmen killed more than 170 people, including Americans, over a days-long siege.

Obama and first lady Michelle Obama each placed a white rose on a memorial to the victims. The president then signed the hotel guest book before telling about 50 people gathered - family members of those killed, survivors and hotel employees at the Nov. 26 attacks - what "an extraordinary honor it is to be here in India."

"To those who have asked whether this is intended to send a message, my answer is simply: Absolutely," Obama said of his first stop. "In our determination to give our people a future of security and prosperity, the United States and India stand united."

Obama did not mention the role of Pakistan, an essential if unpredictable U.S. ally in the Afghanistan war. The omission angered some Indian commentators here. Indian authorities have accused Pakistan's intelligence service of training the gunmen, an allegation Pakistan's government has denied.

The previous two U.S. presidents have visited India, and the country celebrated Obama's arrival.

Parts of this city were cordoned off for security reasons, and Indian authorities have even imposed restrictions on the celebration of Diwali, the Hindu festival of lights, including a ban on firecrackers in areas where the president will be.

Obama and the first lady plan to visit a school here Sunday to celebrate the holiday with a group of children before heading to New Delhi, where Prime Minister Manmohan Singh will host a state dinner in his honor.

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