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Bumpy road ahead for India-EU FTA

Economic Times | 31 Oct 2009

Bumpy road ahead for India-EU FTA

Nirmala Ganapathy, ET Bureau

NEW DELHI: Ahead of the India-EU summit next month, the European Commission has said that the tough part of the India-EU Free Trade Agreement (FTA) negotiations was still ahead and that non-trade issues were an important part of the talks. The India-EU FTA, which has seen seven rounds of negotiations, is nowhere near completion with India and EU failing to see eye to eye on many issues, ranging from trade issues like government procurement to non-trade ones such as environment and labour.

However, ambassador of the European Commission to India, Daniele Smadja, on Friday pointed out that the India-EU FTA was an ambitious agreement and that substance could not be sacrificed for a quick conclusion. “We are, like India, convinced about the contribution of free trade to the global economy, but we want to maintain our objective of very comprehensive and highly beneficial agreement,” she said and added: “We knew right from the beginning this FTA would be difficult.”

Though Ms Smadja said the priority in the negotiations remained issues like tariff, market access, non-tariff barriers, government procurement and IPR, she also maintained that non-trade issues were also important. “We both have difficult constituencies to satisfy. We have to find mutually acceptable and beneficial outcome... The non-trade issues are important and they are public policy concern. But in FTA the first priority is tariff, market access, non-tariff barriers...,” she said.

She further said: “Non-trade issues are of concern...when we address all issues...they have to be addressed together.”

However, the Indian side feels that it is a ploy of the developed countries to bring labour and environment issues into a trade agreement. The Indian side has expressed its opposition to issues related to environment and labour, including human rights, being tagged to the agreement. It is felt that these issues should be discussed in forums like the UNFCC and ILO. “How will it help development of trade,” said an official.

Sources said that the two sides are nowhere close to an agreement. They added that India and the EU, till now, have agreed only on broad parameters to eliminate tariff lines on 90% in seven years. However, there is no agreement yet on the negative list nor do both sides see eye to eye on government procurement, an area where the EU is pushing for more access. “We hope that the summit will give political impetus and political traction to unlock a number of issues,” said Marco Buti, director general, economic and financial affairs in the European Commission in Brussels, who is here to participate in the third India-EU Macroeconomic Dialogue.

 source: Economic Times