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EU-India FTA may soon be on Back Burner

Posted: Monday, 22 April 2013 16:12

EU-India FTA may soon be on Back Burner

April 22: The negotiations between India and the EU for the Free Trade Agreement (FTA) went up a notch last Monday at the ministerial-level talks in Brussels with both sides airing optimism about making further progress in the coming months but the body language indicates that they may not be close to signing and further delays might consign the issue to the back burner, opines Subhash Arora

After six years and almost 20 meetings between the two sides, there are a few issues still proving to be the stumbling blocks. Both India and the European Union shared the view that the talks in Brussels would give a boost to move forward. However, statements like “the talks provided a renewed momentum to bring the negotiations forward,” and it was a “positive meeting,” are mere pleasantries and belie the optimism expressed that the talks are at the final stages and that the two sides might ink the deal within the  next couple of meetings.

As predicted by delWine a couple of years ago, the delay tactics are already on and the voices seem to be getting louder.  Just as the Prime Minister Manmohan Singh left for Europe with the Commerce and Industry Minister Anand Sharma who was at Brussels for the meeting on April 15 the Chairman of Parliamentary Standing Committee on Commerce, Shanta Kumar wrote to him requesting to put off signing of the India-EU free trade agreement (FTA) till the committee deliberated on the issues already raised. In view of many issues and concerns raised by the various States, NGOs and stakeholders, he felt it would be appropriate to defer signing of the FTA. Several other lobbyists besides the Indian wine producers, like automobile manufacturers, legal experts and healthcare activists are putting pressure on the government to delay the signing of the Treaty.

Some groups feel that EU has been too ambitious and wants more without giving in. They would like India to raise the equity cap on FDI in insurance sector and reduce the tariffs on imports of automobiles (Times of India has already announced in a recent article that the duties are being brought down to 10% for the expensive cars from EU in 2017); EU is unwilling to grant India Data Secure status and allow free movement of professionals. Another demand being seen as unreasonable is for TRIPS-plus measures, which if accepted would have a negative impact on healthcare in India.

The EU-India trade is quite well balanced with a 2-way increase of about 33% from 2007 to 2011 according to the figures released by EU. India exported goods and services to the EU worth €39.2 billion while the imports were €40.4 in 2011. There was better balance for India in 2011 than in 2007 when the import was € 29.4 billion though we exported only worth € 26.2 billion. There is a lot to gain for both sides with the Treating falling in place, says João Cravinho, Ambassador and Head of Delegation of the European Union to India, who is quite optimistic about the treaty to be signed by October, 2013.

It may be of interest to the EU wine producers that things have progressed in a positive direction despite the strong Indian lobby generally wine area despite the obvious Indian political lobby. Without willing to enter into the discussions, (‘I would prefer to leave the negotiating to the negotiators’, he informed delWine), he said, ‘what I would like to add on wines is that we are moving positively and have almost reached an agreement. Personally I do not believe that wines will prove to be a stumbling block. There has been positive movement towards bridging the gap. Wines in any case are a small part and it is the Spirits that could be trickier,’ he says. ‘But the biggest sticking point is in the area of services so we are waiting to see if the government can deliver what it promises,’ he adds.

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.

Subhash Arora


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