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Blog: Treaty with EU likely to go on the Back Burner

Posted: Tuesday, 10 September 2013 11:11

Blog: Treaty with EU likely to go on the Back Burner

Sep 10: As always feared and reported by delWine many times, the ongoing talks on the Foreign Trade Agreement between EU and India reported by several newspapers in India to be in the final stage of negotiations, are most likely to be consigned to the back burner with the elections in India to be held next year, as FTA might be politically unsafe for the present government.

According to our reliable sources in Brussels, the talks are now being stalled for precisely the same reason-the Elections 2014. January 2015 seems to be the earliest when the talks are expected to resume with earnest. No statement has been made by the European Union, nor is there a likelihood since such statements need not be issued. The process will not be stopped but just stalled. The next round is expected to take place within a month. Interestingly, no summit has taken place since February 2012. The Prime Minister of India and the President of European Union meet directly to discuss the progress usually once a year.

The sources are also quite wary of the bureaucratic delays that the talks have seen due to the frequent changes in the personnel assigned to attend the meetings in India. In a characteristic style, the Indian Bureaucracy appears to have trumped the European Union Bureaucracy in such tactics. Although no one should suspect the Indian side using the delaying strategy, 8 years have passed since the negotiations started and at least for the past 3 years the talks have been claimed to be in the ‘final stages.’

In one of the sessions at the World Wine Symposium held at Villa d’Este in Italy in November 2011, the speaker was a senior official of the European Parliament. I had distinctly told her to convey the message to the negotiators in Brussels that if the Treaty was not signed by June 2013, one could forget about it since the elections would be on our head in India where political expediencies and the self-preservation of the incumbents becomes the primary goal. The issue of duty reduction on wine and spirits would be an anti-populist step so far as the vote bank was concerned,  over-riding the long term benefits both sides were expected to derive. 

In April this year, delWine had opined, ‘it is unlikely that June would see both sides signing the dotted lines. All hopes seem to be on October and if that does not happen, the whole process may go to back burner. As already reported by delWine, the EU and the US trade agreement talks are about to start in June and it would be important for EU to put their efforts and strategies behind those important negotiations. Besides, with the election fervour catching up and the pressure against signing the Treaty building up in India, the elections may end up playing a spoil sport. DelWine has been arguing for almost two years now that it is important for the Treaty to be signed before June 2013 because of the General Elections taking place in 2014. As predicted by delWine a couple of years ago, the delay tactics are already on and the voices seem to be getting louder.’

A couple of months ago, media reports had come out with the news that the Indian government had accepted a drop in the customs duty from 150% to 40% above a certain level. In fact, the Times Group publications were emphatic in announcing that this action was soon to come in force. DelWine had then taken the contrarian view - and I quote  about the ramifications when I had said, ‘the government cannot afford to take such a decision at election time. If this happens, prices (of imported wines) will come down so much that nobody will then opt for Indian wines anymore. And even if they are able to sign the treaty on this, Parliament will not let it pass. With due respect to the Hon’ble Commerce Minister Anand Sharma, let us not forget that he has to run for elections next year. How would he be able to justify to the people, the shutdown of the industry which is still in doldrums but has been trying to grow during the last 20 years?’

Surprisingly, no one in the Indian wine industry had reacted to the statement in the media until after the above article was published.

It’s not that the European Union has woken up only now. In the September 27th article in the Indian Wine Academy in 2011, it was clearly reported, ‘if you were hoping for the import duties on wines to come down with the imminent signing of the Foreign Trade Agreement between EU and India, you may have to dream longer with the Trade Commissioner of the European Commission Karel De Gucht admitting at a Press Conference in Brussels yesterday that due to slow progress in free trade negotiations with India, the target and hopeful date for reaching a deal is now February 2012 during the next Summit to be held in New Delhi.'

As I exchanged notes last week with Robert Joseph, the well-known columnist, author and a fellow judge at Mundusvini in Neustadt, about the wine industry in India in which he has had an enormous interest, he said, ‘the thing about journalists like you and me, is that our utterances are on record and can always be referenced in future.’ Of course, as journalists it is our job to report about a situation based on the facts and parameters at that time and they may change with time. Although the mainstream media may have some soul searching to do and find out if it was an honest reporting or editorial pollution it is my opinion, based on our reliable sources of information in Brussels who do not like to be named, that the Treaty talks are already on the back burner and neither side appears to believe that it would be signed before the next general elections in India.

And if the new government comes in power, the whole process may take years to come back on the original tracks depending on the policies of the new government. At any rate, the prices of wines imported from EU are not likely to come down till at least 2017, two years after the treaty is signed, whenever.

Subhash Arora

Tags: Foreign Trade Agreement, FTA, Indian wine industry



Siyamalan Says:

As Expected Siyamalan

Posted @ September 13, 2013 13:10


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