November 6, 2010

OBAMA, IN MUMBAI, TO ANNOUNCE REFORMS TO BOOST U.S. TRADE WITH INDIA

* Obama touched down just before 1 p.m. local time in a country whose leaders and people have high hopes for his visit. His three-day stay follows months of perceived drift in a relationship that administration officials say is central to Obama's ambitions in Asia.

* Obama will also tell the U.S.-India Business Council that he will support India's membership to four international alliances responsible for regulating trade in nuclear, chemical and biological materials, including the Nuclear Suppliers Group. Indian leaders have aspired to membership, but U.S. non-proliferation groups immediately criticized the move for weakening the world's ability to monitor nuclear trade.

* Administration officials say he will take part in announcing a set of business deals, some of them in the works for months, after a meeting with American chief executives at the business forum. The agreements - including sales of military transport aircraft, diesel engines, jet engines and other U.S. manufacturing products -- total $10 billion and support 54,000 jobs in the United States, according to administration officials.


By Scott Wilson
MUMBAI - Days after reaping the political consequences of a poor economy, President Obama intends to announce a series of reforms Saturday to increase trade between the United States and India, his first stop on a 10-day Asian tour focused largely on promoting economic growth at home.

In an address to several hundred American and Indian chief executives in this seaside commercial hub, Obama will announce changes in the export-control system that guides trade between the two countries, administration officials said. Those include removing several Indian space and defense companies from the so-called entities list, which identifies firms that make products with dual civilian and military purposes and makes it more difficult for them to trade with the United States.

Obama will also tell the U.S.-India Business Council that he will support India's membership to four international alliances responsible for regulating trade in nuclear, chemical and biological materials, including the Nuclear Suppliers Group. Indian leaders have aspired to membership, but U.S. non-proliferation groups immediately criticized the move for weakening the world's ability to monitor nuclear trade.

Obama touched down just before 1 p.m. local time in a country whose leaders and people have high hopes for his visit. His three-day stay follows months of perceived drift in a relationship that administration officials say is central to Obama's ambitions in Asia.

The high U.S. unemployment rate played a central role in midterm elections that went sharply against Obama's party, and he intends to speak more directly throughout his Asian trip about how his foreign policy goals relate to U.S. economic interests.

Administration officials say he will take part in announcing a set of business deals, some of them in the works for months, after a meeting with American chief executives at the business forum. The agreements - including sales of military transport aircraft, diesel engines, jet engines and other U.S. manufacturing products -- total $10 billion and support 54,000 jobs in the United States, according to administration officials.

"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."

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

He made his way -- first by helicopter, then motorcade -- to the Taj Mahal Palace and Tower Hotel, a focal point of the November 2008 terrorist attacks by a group of men from Pakistan. 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 the roughly 50 people gathered - family members of those killed, survivors and hotel employees present for the Nov. 26 attacks -- what "an extraordinary honor it is to be here in India."

"To those who ask if this is designed 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. Indian authorities have accused Pakistan's intelligence service of training the gunmen, an allegation that Pakistan's government has denied.

"We will always remember the events of 26/11, not only the sorrow but the courage and humanity that was displayed that day," Obama wrote in the hotel guest book. "The United States stands in solidarity with all of Mumbai and all of India in working to eradicate the scourge of terrorism, and we affirm our lasting friendship with the Indian people."

Ahead of his arrival, a group of American chief executives attempted to underscore the importance of the trip in promoting future U.S. job growth and to dispel concerns that India, a fast-growing economy of 1.2 billion people, takes more American jobs than it is likely to generate.

David Cote, chairman and chief executive of Honeywell, suggested to reporters here that "archaic export controls" guiding U.S.-India trade could be changed during Obama's visit, which includes, on its first day, a forum with several hundred American and Indian business leaders.

But Cote, who serves on the presidential commission that will recommend ways of addressing the nation's fiscal situation in a few weeks, said the American perception that companies ship jobs overseas only to take advantage of lower labor costs is misguided.

He said Honeywell, which manufactures aircraft avionics, jet engines and other technical products, operates in India because of the "superior engineering" 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.

Obama's trip will take him to four Asian democracies 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 andJapan could drive future U.S. economic growth as American consumers retrench after the credit crisis.

India's economy is projected to grow 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 under 35 years old, a higher proportion than in some of the largest U.S. trading partners. Obama is expected to highlight 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.

Harold "Terry" McGraw III, the chairman and chief executive of McGraw-Hill Companies, described the U.S.-India relationship as one of "shared values, shared beliefs."

India is the world's largest democracy, and administration officials have said that, throughout the trip, they intend to emphasize the fact that emerging economies can thrive in democracies in a tacit challenge toChina's more authoritarian model of state control.

But McGraw, who is chairman of the U.S.-India Business Council, the group that Obama will address Saturday evening, also highlighted the specific financial opportunity India represents for American companies. McGraw said India plans to spend $1.5 trillion on infrastructure over the next decade. "What a huge opportunity for U.S. businesses," he said.

The past two U.S. presidents have visited India, and the country appeared eager for Obama's arrival. Parts of this city have been 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.

Indian companies and business groups took out full-page adds in local newspapers welcoming Obama, and signs greeting the American president dotted the urban backdrop of India's most entrepreneurial city.

"We're a natural partner for India given the nature of our systems -- democracies; vibrant, tolerant, diverse societies," Thomas E. Donilon, the national security adviser, told reporters traveling aboard Air Force One. "Our intent here during the course of this trip is to demonstrate that breadth."

@ The Washington Post