**A Tale of Two Trading Partners:**

**Making the Case for Economic Reform**

*Remarks by Sy Sternberg*

*Chairman & CEO, New York Life*

*Mumbai, India*

*November 29, 2006*

I would like to congratulate Frank Lavin, Under Secretary of Commerce
for International Trade, for leading this trade mission, the largest and
one of the most important ever hosted by the United States. The size of
this mission, and the number of people in this room, speak volumes about
the level of US interest in India.

My visit to India is the result of the remarkable success of two
partnerships.

First, is the strong and growing bilateral relationship between India
and the United States. The U.S. is India's largest trading partner. Even
beyond economics, our two nations are forging deep relationships through
an unprecedented level of engagement and cooperation.

1

The second partnership that brings me to India is between two companies
-- New York Life and Max India Ltd.

I am fortunate to be spending this week traveling throughout India with
my business partner, Analjit Singh of Max India Limited and my
colleagues from New York Life. Max India and New York Life launched a
joint venture in India in 2001, and it has quickly become one of New
York Life's fastest growing and most successful international
operations.

Although we have operated in India for just six years, today we employ
some 19,000 agents in India, serving more than 100 cities and rural
areas. Our experience with Indian consumers goes back even further. In
the United States, we are the single largest provider of life insurance
to the U.S. Indian community. More than 30% of U.S. Indian households
that have life insurance own New York Life policies. Many of our
company's top U.S. agents are Indian-born or are of Indian ancestry.

While our company is fairly new to India, New York Life has been in
business in the United States for over 160 years, and is number one in
U.S. life insurance sales. We conduct business in all 50 U.S. states and
in nine international markets in Asia and the Americas.

When India lifted the restrictions against foreign firms in the year
2000, we naturally had a strong interest in applying our experience with
the Indian market in the U.S. to the insurance market here. We were
fortunate to partner with Max India, a company that has the same values
as New York Life: a dedication to the financial security of its
customers and a commitment to conducting its business and community
responsibilities with integrity and humanity. In return, we contributed
the skills we have developed over the past 160 years for building an
agency distribution system that is acknowledged to be one of the best in
the industry.

New York Life's international markets now account for about one-fourth
of our company's worldwide life insurance sales. Within the next two to
three years, I expect international insurance sales will nearly double.

So, international trade issues are of great relevance to New York Life.
And, right now, these are issues of immediate, pressing concern to all
of us. My message to this group is a simple one \-- in spite of all the
work done to lower barriers to international trade and commerce in the
past fifteen years, [globalization is in trouble]{.underline}.

The tide of popular opinion is turning back toward protectionism and
isolationism -- at a time when cooperation among nations and the
economic stimulus provided by global economic integration are more
urgently needed than ever.

In the United States, we have opponents to globalization at both ends of
the political spectrum. International trade has become a rallying point
for any number of advocacy groups who see foreign competition as the
root cause of a whole host of economic, social and environmental ills.
Meanwhile, popular television commentators in the U.S. are fueling these
fears, painting a dismal picture of overseas workers and illegal
immigrants to the U.S. draining our nation of its jobs and prosperity.

Never mind the fact that it has been proven, many times in many nations,
that trade liberalization promotes long-term growth. Never mind the fact
that a good portion of the wealth created in recent years in the United
States, in India, in China and in much of Europe is directly
attributable to market globalization. In times of economic uncertainty,
people look for a villain.

In this month's U.S. Congressional election, a sizable number of
office-seekers campaigned as "anti-globalization" candidates. And many
of them were elected. However, now Congress will be faced with a
dilemma: how is it possible to advance economic growth by clamping down
on trade? It just can't be done.

Those of us who understand the benefits of opening markets and
liberalizing trade have a responsibility to make our voices heard. In
the U.S., The Business Roundtable, which is composed of the CEOs of the
top 100 American companies, is seeking ways to advance the global trade
agenda within an increasingly polarized political environment. I have
been active in the Roundtable's efforts to show legislators that
globalization need not be a zero-sum game, in which one nation must lose
for another nation to gain. Instead, there are ways to achieve the
economic benefits of trade while ensuring that labor rights are
protected . . . environmental standards are maintained . . . and least
developed countries are guaranteed preferred access to markets.

The Business Roundtable is also working towards securing a Congressional
vote for the renewal of Trade Promotion Authority, which gives the
President authority to negotiate foreign trade agreements, subject to
approval without amendment, by Congress.

A few weeks ago, I had an opportunity to share my views on trade at a
university forum in New York. The audience voiced the usual concerns:
Does more globalization mean fewer jobs for our own people? Don't we
have a responsibility to protect U.S. manufacturing industries that are
threatened by overseas competition?

I reminded them that the effects of global trade on American jobs are
small compared to the ongoing churning of jobs that takes place in any
growing economy. Far more job displacement in the U.S. can be attributed
to advancing technology and increased productivity. For example,
American farm employment has been falling for decades -- not because of
food imports, but due to the mechanization of agriculture.

There seems to be a fundamental economic law that applies to both new
technologies and increased trade: Both have a tendency to displace jobs,
but both also help to significantly lower the cost of consumer goods and
services. To give you an example, consider the cost of a new color
television set sold in the U.S. in 1970. It most likely contained vacuum
tubes, was domestically manufactured and would have cost the average
American worker a full month's pay.

However, if that same American worker were to purchase a similar TV
today, it would most likely be manufactured in Asia, contain solid-state
technology and could be paid for with just two or three days' salary. If
the U.S. banned all imports, the cost of many consumer goods would more
than double.

According to one study, the typical American household has gained
\$10,000 [annually]{.underline} from postwar trade liberalization. So,
when my protectionist friends argue that trade barriers could save some
American jobs, I ask them: At what cost?

Actually, throughout the last decade, America has been one of the
world's largest [importers]{.underline} of manufacturing jobs, with
foreign producers investing more in our country than we do abroad.
Today, one out of eight manufacturing workers in the United States is
employed by the U.S. affiliate of a foreign-owned company.

Let me give you some examples.

As of last month, the three top selling 2006 model year passenger cars
in the United States are the Toyota Camry, the Toyota Corolla and the
Honda Accord. Toyota builds Camrys in Kentucky and Corollas in
California, and employs some 40,000 Americans in product development,
manufacturing and marketing -- along with 75,000 more in dealer-related
operations. Honda builds its U.S. Accords in Ohio and Alabama. That
company manufacturers more than 80 percent of all its vehicles for the
American market in U.S. factories. As you can see, it's no longer so
easy to say which is the "foreign" and which is the "domestic" product.

The U.S. aircraft industry has been another big beneficiary of expanded
trade. The Boeing Company has firm orders from nine countries for 2008
delivery of more than 270 "787" Dreamliners, the aircraft company's
newest passenger jet. Out of these 270 orders, less than 20 are from
U.S. airlines. Imagine where Boeing would be without access to foreign
markets!

Unfortunately, there seems to be a growing number of people who would be
in favor of limiting access to foreign markets, restricting
international commerce and turning back the clock to an earlier
pre-global era.

Of course, not only is this unwise, but in the long run, it will prove
to be impossible. Today's interdependence among nations, coupled with
the distance-erasing capabilities of technology, is already transforming
the world into a single marketplace. Along similar lines, it is
absolutely clear that many of the 21^st^ century's greatest challenges .
. . including the eradication of terrorism, the control of pandemics and
the protection of the earth's environment . . . can not be effectively
addressed by a single nation. All require a global perspective and all
demand global action.

There are many, like myself, in the United States who believe that an
unhampered flow of international trade and international investment is a
prerequisite for economic growth in both the developed and developing
nations of the world. We are working hard to make the case for economic
openness, with the media, in the halls of Congress and at forums like
this one.

If we are going to turn the tide of popular opinion, we need support
from outside the U.S. And this is where India -- a nation that is well
on its way to becoming the world's second largest free market economy --
can play a crucial role.

India's ascendance as a global power will profoundly influence the
events of this century. India now has the world's third largest army.
India is playing a central role in the Iran nuclear debate. And, soon,
India hopes to gain a seat on the UN Security Council.

The United States and India both have much to gain through strengthening
the alliance between our two nations. We have strong mutual interests in
matters of national security. A strategic partnership between the United
States and India can provide an important measure of future stability in
a rapidly changing Asia.

The recent exchange of state visits between our two nations and the
decision to allow the export of civil nuclear technology marked a
watershed in bilateral relations. It is also precedent- setting: This is
the first time the U.S. has offered civilian nuclear cooperation to a
nation that has not signed the Nuclear Nonproliferation Treaty or the
Comprehensive Test Ban Treaty.

In addition to finding new areas of strategic alliance, our two nations
are also exploring new avenues for expanded trade. A U.S.-India Trade
Policy Forum and Economic Dialogue have been launched, to stimulate
government action on trade issues. The private sector will be called
upon as well, with more opportunities for business leaders to suggest
specific policy recommendations. And we are seeing an expansion in the
number of areas of economic and trade cooperation between our countries,
from civil aviation to agriculture.

Most encouraging of all, business between our two nations has never been
better. On the bilateral trade front, trade between the U.S. and India
has been growing at 20 percent or more per year. U.S. exports of goods
to India rose this year by 35 percent, to \$9.5 billion. U.S. imports
from India were up 26 percent this year, to \$17.4 billion. Yesterday it
was reported that America's largest retailer, Walmart, will be opening
stores in India.

I couldn't agree more with Frank Lavin when he wrote yesterday: "My hope
and desire is that every Indian business will have the opportunity to
compete in the American market, and every American business will be able
to offer their products to Indian consumers."

There is still much that we can do right now to improve the outlook for
global trade reform. First and foremost, India and the United States
have a brief window of opportunity to help rescue the Doha negotiations
by taking a leadership role together and forging a consensus on
unresolved issues. We are at a critical juncture and we must move
quickly to end the stalemate.

Second, I would suggest that India has much to gain by further
leveraging the relationship between foreign investment and domestic
infrastructure development.

A few weeks ago, I attended an event in New York that featured a number
of the architects of India's economic reform. Several made reference to
a recent address by Prime Minister Singh, in which he noted that \$320
billion in additional investment capital to improve infrastructure will
be required in the next 5 to 10 years for India to achieve an increase
in real economic growth from the current annual 8 percent to the desired
10 percent, as outlined in the 11^th^ Five-Year Plan. He acknowledged
that some of this capital will come from the public sector, but he also
commented that much of it must come from foreign direct investment.

This is where our insurance business comes in.

Large infrastructure projects \-- such as power generation facilities,
roads, airports, shipping ports, hospitals and schools -- need to be
financed with long-term debt. And no one is a better customer for
long-term debt instruments than the insurance industry. Life insurance
companies must make long-term investments because we hold long-term
liabilities -- the claims we promise to pay to our policyholders.
Essentially, we are eager to lend India our capital to advance the
infrastructure improvements Prime Minister Singh has proposed.

In our view, it simply does not make sense to constrain the insurance
industry's ability to invest in India. For that reason, we have been
actively seeking an increase of the insurance industry foreign equity
cap, from the current limit of 26 percent to 49 percent. Prime Minister
Singh supports this position, and we understand that legislation to
accomplish this reform may be introduced in the winter session of
Parliament, now underway.

My own industry's concerns aside, it would be tragic to see India's
economic renaissance of the past 15 years lose momentum. For this is
truly a pivotal moment for India.

It is a pivotal moment for India's global leadership, as the nation
assumes a new level of influence on the world stage.

It is a pivotal moment for social and economic progress in India, as the
nation seeks the best ways to provide opportunity for the
underprivileged and the undereducated.

And it is a pivotal moment for India-U.S. relations, as these two great
democracies build an alliance based on mutual interest and mutual
respect.

The business communities of both nations believe in the promise of this
alliance and are committed to its fulfillment. Your enthusiasm and
support for this trade mission is ample evidence.

As I mentioned to you earlier, in the insurance industry, we are
required to plan and invest for the long-term. We are always trying to
see around the corner, to anticipate what the world will be like the day
after tomorrow.

Well, at New York Life, we have invested in India. And we will continue
to invest in India. Because, from what we know of this nation, its
leadership and its people, this is where tomorrow's best opportunities
will be realized.

Thank you.