The Indo-U.S. Knowledge Trade Initiative (KTI) is a bilateral forum to address issues impeding the trade in knowledge-based products and services between India and the U.S. "Knowledge based" refers to any product whose value is derived through the transfer of information. In some knowledge-based sectors, such as software and IT services, the trade relationship between the two countries is already extensive and growing rapidly. Yet the concept of knowledge-based industry extends to a much broader range of activities. One of the primary objectives of the KTI is to draw attention to emerging industries, especially biotechnology and e-entertainment, where the scope for Indo-U.S. trade is potentially very large.

The commercial importance of the Indo-US relationship in the knowledge-based industries is difficult to over-estimate. In important respects, the American IT success story of the 1990’s is a story of successful Indo-U.S. commerce. More than 60% of India’s IT exports are bound for the U.S., and India is the largest supplier of American IT imports. Seventy five percent of successful Silicon Valley companies have an Indian at the senior corporate level. Indians fill nearly one half of all H1B visas. One premise of the KTI is that the pattern of IT cooperation provides models that can be adapted for other industries. Many of the issues encountered by the new economy are being confronted by countries for the first time. India and the US are at the leading edge of the new economy. The KTI provides the two with the opportunity to take the lead in developing a global framework in which these issues can be considered.

Program of work:

An MOU between FICCI and the USIBC was signed during President Clinton’s visit to India in March 2000, and was subsequently organized under the auspices of the USIBC and The Federation of Indian Chambers of Commerce and Industry (FICCI). It is useful to consider the work of the KTI since that time in two phases: an exploration phase and a consolidation phase. We are currently drawing to a close the first, and beginning the second.

During the exploration phase, we identified seven policy areas affecting the trade of knowledge based products and services. These areas are:

• E-commerce regulation and taxation
• Trade in services and market access
• Intellectual property rights
• Human capital development
• Digital divide
• Financial sector reform
• Information infrastructure

Working groups were formed to examine each of these areas. In these groups, we consider how elements within each impede trade, and what can be done, by whom, in order to overcome these. Our discussion is also fueled by the realization that the resolution of many of these issues on a bilateral basis, without consideration of the global environment in which they will operate, would be meaningless. Throughout our discussions, we examine the work of many like-minded organizations to try to develop consensus views.

Each of our working groups meets frequently via conference calls, videoconferences, and face-to-face meetings. The bilateral working groups met in India in November 2000, and again in March of this year. We have just concluded a series of extremely constructive videoconferences in each of our working groups, during which we developed concrete follow on steps in each area. The Indian KTI team is strongly represented in the delegation here for the AGM, and we look forward to continuing the dialogue with them here.

In many ways, the dialogue within the KTI provides an alternative to the ordinary channels for trade discussions between the two countries. One of the lessons of the Seattle WTO round was that a new framework is needed for a constructive discussion of trade policy. By isolating the discussion to an area in which the US and India are natural leaders, and stand to mutually benefit by the development of forward thinking, proactive policies, we believe that we will be able to make some critical first steps in developing a mutually beneficial trade dialogue.

In addition to the seven policy areas mentioned earlier, we focused on two industries in which we believe that the potential between the two countries is particularly rich: biotechnology, and e-entertainment. Working groups have been formed, and an ambitious work program is being developed in these two areas.

The consolidation phase of the KTI will result in two primary deliverables: the KTI Final Report, and the KTI Rollout, a mega-event set to take place in Chennai, India, September 24-25, 2001. The final report will summarize the discussion in each of the KTI working groups, and produce a series of recommendations for realizing the potential in the trade relationship. Over 100 experts have participated in KTI discussions, and these will be closely consulted in developing this document. A draft version of the final report will be available in late July, and will be disseminated via the KTI website (http://www.knowledgetrade.org/) for comment.

The final version of the KTI final report will be presented during the KTI Rollout, September 24-25. This event will draw together key industry and government stakeholders in Chennai. Tamil Nadu in general, and Chennai in particular, is recent, but fast-rising arrival on the Indian IT map. It was chosen as the site for the KTI rollout on account of its active IT and biotech industries, its reliable infrastructure, and the commitment of the state government to these industries.

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