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End of year deadline for India-EU FTA is unrealistic: EU ambassador

Live Mint - 29 October 2023

End of year deadline for India-EU FTA is unrealistic: EU ambassador
By Utpal Bhaskar, Shashank Mattoo

Stressing the need for a level playing field for European businesses, Hervé Delphin cited concerns about India’s regulatory uncertainty as a potential dampener on EU investments.

An end of year deadline for a free trade deal between India and the European Union is unrealistic, the 27-nation grouping’s Ambassador to India, Hervé Delphin, said in an interview. Stressing the need for a level playing field for European businesses, Delphin cited concerns about India’s regulatory uncertainty as a potential dampener on EU investments.

How are the India-EU FTA talks going?
I don’t think that, to my knowledge, India has had such a large-scale FTA with any other partner. You cannot compare us with the UAE or Australia or even the UK. It (EU) is the biggest market in the world and this means a degree of complexity in terms of negotiation. Access to the EU market is a very high price for anyone and we don’t give it like this. It’s part of a negotiation based on reciprocal arrangements and fair and transparent mechanisms that will create a level playing field. So that is the condition of having an FTA. So far, the negotiation has been going on at quite a sustained pace. There is clearly a political momentum and backing behind it. For us, we are fully committed. There may be a senior-level official meeting again in November. I see business communities on both sides very eager to have the FTA. Our trade has tripled in the last few years and India is also rising as an investor in Europe. It’s true that for Europe’s investors or companies, entering the India market is quite a high- price market. When you are an SME or even a bigger size company entering the Indian market, people will think twice if it’s worth the investment. I guess you’ve heard and I’ve heard European companies expressing concerns about quality control orders, market access, regulatory conditions or quantitative restrictive measures. What I can only say is that business wants predictability. What we’re trying to achieve with the FTA is creating this level playing field.

India is close to a general election. Is there a timeline for completing the FTA?
I’m not in the negotiating team, but as of right here, there was a lot of hype about having the FTA completed by the end of the year. I mean, anyone in his right mind, knowing the complexity of this negotiation, will not believe for a second that it was an achievable target. So it may be aspirational. But you cannot consider that concluding the FTA by December is realistic. And the question is, do we want to rush to a deal for the sake of saying we met the deadline at the risk of ending up with a bad deal? Or do we want to continue to be committed to state of the art modern, comprehensive FTA and it will take the time it takes? I think reasonably speaking the latter is better than the former.

Is an early harvest deal on the table?
If you were to go into what you are suggesting, that will mean a completely different dynamic and if you check EU records, that’s not the EU’s preferred approach.

There has been a lot of conversation about the EU’s Carbon Border Adjustment Mechanism (CBAM). It has attracted some criticism in India. How should both sides navigate this?
One thing that struck me when I arrived here was that there was so much negative coverage about CBAM here, based on quite a number of misconceptions. I think to consider that CBAM as a protectionist instrument is completely misleading or missing the point about what it is. First, you are familiar with the CBAM and the transitory period, so we are not taking anyone by surprise. We are not targeting anyone by design. It’s not targeted at a company or a specific country. We are looking at the six sectors that are big carbon emitters and where the trade with Europe could lead to carbon leakage and could actually create an uneven playing field for European companies that are subjected to ETS trading. So to say that this is protectionist, for me, is missing the point of what we are trying to achieve, which is basically a contribution to the global commitment that all the partners have committed to reduce carbon emissions around the world. So this is us walking our talk. This is also not unilateral because you can take out your own emissions trading scheme and you can offset them from our own system. So it’s up to you to design your system.

How has your conversation with the Indian government been on CBAM?
There have been discussions but it was not expressed in the sense of an aggressive “this cannot be". There were civilized conversations and indeed, on the EU side, an absolute willingness to walk the extra mile to explain CBAM and to organize different seminars so that it’s absolutely clear how it’s gonna work.

How do you see the evolving conflict in West Asia?
I worked in the region of the Middle East and dealing with what is the so-called Middle East peace process. You don’t see much of the peace now, unfortunately. People have to keep their head cool because the risk of escalation is significant. So everyone has to be guarded not to take any step that could have dramatic consequences. And I think messages are passed around to prevent any further escalation. Actually what India said is very similar to what the EU said about standing with Israel in solidarity in the face of a brutal, horrific terrorist attack, but to go back to the fundamental element of Oslo of a viable two-state solution.

I was in charge of humanitarian assistance in the region. So I’ve been in Gaza to make sure that there was aid flowing in. So, I feel very emotionally connected to it because there are people I know there. This is horrendous. I was looking at the statistics of the casualties (of the conflict). Almost half of the victims are children. In international law, you have to ensure access to civilians. There is a principle of distinction, the principle of precaution, the principle of proportionality. This is what the IHL (International Humanitarian Law) is saying. And no one can stand above IHL.

 source: Live Mint