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U.S. WON'T PENALIZE INDIA FOR FOREIGN-TRADE BARRIERS

The Bush administration announced Thursday it will not impose economic sanctions on India for trade barriers the United States deems offensive.

U.S. Trade Representative Carla Hills termed India's barriers to investment by Americans and other foreigners and its exclusion of U.S. insurance companies as an unreasonable burden on U.S. commerce.But she said that retaliation was inappropriate at this time because of ongoing global free-trade talks. She said the administration would try to resolve its dispute with India as part of those discussions.

Those discussions, being held under the auspices of the 96-nation General Agreement on Tariffs and Trade, are scheduled to conclude at the end of this year. India is considered a key participant in the talks, known as the Uruguay Round, because of its influence over other developing countries.

Hills said India's announcement on May 31 that it would remove some of its barriers to foreign investment was a hopeful sign.

"Our message that foreign investment brings jobs, technology and prosperity may be getting through," Hills said. "I hope this attitude will be reflected in India's approach to these issues in the Uruguay Round."

The administration's decision was relayed on Wednesday to Abid Hussain, India's new ambassador to Washington.

The administration faced a June 16 deadline to decide whether to boost tariffs on Indian imports or impose other retaliatory trade sanctions because of India's refusal to negotiate the dispute.

The case against India involves that nation's barriers to foreign investment and its refusal to allow American insurance companies to do business in the country.

India was one of three countries placed on a trade "hit list" last year by the administration for erecting the most offensive trade barriers against American products.

The other two countries, Japan and Brazil, both successfully reached agreements with the United States to remove the offending barriers. However, India has refused to negotiate under threat of U.S. sanctions, which are allowed under a section of the 1988 trade law known as Super 301.