NEW DELHI: The government is set to ask all its officials to stay away from any interaction with a delegation from the US International Trade Commission (USITC), a quasi-judicial agency, probing the impact of India's trade and investment regime on the American economy in what is seen as the latest sore point in economic ties between the two countries.

The move follows a meeting in the ministry of external affairs on Friday and comes after the government took the view that its laws and policies are its sovereign functions, while the US actions are unilateral. “The hearings relate to our patents regime and industrial and trade policies, which are governed by multilateral agreements, of which the US is also a signatory. So, if there is a dispute, it has to be settled at a multilateral forum like the WTO. No country can apply its own law extra-territorially,” said an official privy to the discussions.

As a result, it has been decided that the USITC's request for meetings with officials in close to a dozen department will be turned down, leaving it with the option to hold talks with private companies and industry bodies.

Following an authorization by the Senate Finance Committee and the House of Representatives ’ Ways and Means Committee, USITC is on a “fact-finding” mission and is looking at all Indian policies and tariffs since 2003 that support local industries and may discriminate against US imports, investment and jobs. In addition, there is focus on foreign direct investment (FDI) and intellectual property rights (IPR).

IPR has been a special focus area for US drug majors as they have been hit by India's insistence that it will only grant patent protection for products where a “genuine” invention has taken place and not for mere modification of an existing item. There is widespread annoyance with patent revocations on these grounds. Similarly, Big Pharma is complaining about the decision to waive the patent for a cancer drug and let an Indian company manufacture it at a substantially lower cost.

The government has maintained that Indian laws are compliant with WTO rules and there was nothing wrong with them. Separately, the US Trade Representative is scheduled to listen to the arguments of Alliance for Fair Trade in India (AFTI), comprising American lobby groups, as part of the hearings for the Special 301 Report, an annual listing of IPR and trade practices in other countries. AFTI comprises groups that represent sectors such as pharma, solar energy, telecom equipment, biotech and music-all areas where the American industry complains that India has “engaged in a persistent pattern of discrimination that is hurting” manufacturing and services industries and jobs in the US.