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EU may gain from negotiating separate trade and investment pacts with India

Mint | 10 May 2021

EU may gain from negotiating separate trade and investment pacts with India

by Asit Ranjan Mishra

The decision by India and the EU to recast the stalled bilateral trade and investment agreement (BTIA) into three separate deals could favour the latter with its focus to have an investment pact with India after inking a similar deal with China.

In the first India-EU leaders’ meeting on Saturday, the two sides agreed to resume talks separately on trade, investment and geographical indications (GIs), which were earlier part of the BTIA before talks collapsed in 2013 after six years of negotiations.

“We agreed to resume negotiations for a balanced, ambitious, comprehensive and mutually beneficial trade agreement that would respond to the current challenges. We agreed that to create the required positive dynamic for negotiations, it is imperative to find solutions to long-standing market access issues. We also agreed to the launch of negotiations on a standalone investment protection agreement. We also agreed to start negotiations on a separate agreement on geographical indications, which could be concluded separately or integrated into the trade agreement, depending on the pace of negotiations," according to a joint statement by India and the EU.

“After the Cairn and Vodafone tax disputes, the EU is under severe pressure from member countries to conclude a high-quality investment agreement with India that protects their investments in India and includes a strong investor-state dispute settlement mechanism to which India is opposed to," a trade official associated with a government-run think tank said under condition of anonymity.

The EU had raised strong objection after India unilaterally terminated its 57 bilateral investment treaties (BITs), including those with EU members. India brought out a new model BIT in December 2015, intending to replace its existing BITs and future investment treaties, after foreign investors opted for international arbitration alleging discrimination and citing commitments made by India to others in bilateral treaties.

“GI should have been part of an intellectual property chapter. EU has been demanding automatic recognition for their GIs such as liquor products and cheese. Most of India’s GIs are textiles and handicraft products, which EU may not recognize. EU will recognize only agricultural GIs. If the deal is along the line of mutually recognizing each other’s agricultural GIs, it is difficult to see India benefiting. Our law does not have any provision of automatic recognition of GIs from other countries. One has to go through the process of applying to the patent authority," he said.

However, one comprehensive deal is difficult as negotiations can get stuck in many areas such as e-commerce, said Arpita Mukherjee, professor at Indian Council for Research on International Economic Relations.

“In this manner, at least we can close some deals, which can be implemented on conclusion," she said.

Trade is now a more vexed issue than in 2013 when negotiations broke down, said Biswajit Dhar, professor of economics at JNU. “Earlier, there was no political commitment on part of the government to protect the industry. Right now, there is a political commitment through initiatives such as Atmanirbhar Bharat and production-linked incentive (PLI) schemes," he said.

The focus seems to be more on process than substance, said a former trade secretary on condition of anonymity.

“At present, this appears to be a political plank to be seen to move away from inertia in trade deals," he said.

 source: Mint