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EU wants India to lower duties through FTA

Times of India | 15 February 2007

EU wants India to lower duties through FTA


NEW DELHI: Trade liberalisation for rubber, tea, coffee and edible oil could be minor political concerns in the proposed free trade pact with Asean compared to what the European Union is looking for in its bilateral agreement with India.

EU expects the comprehensive economic cooperation agreement (CECA), which will include trade in goods, services and investment, with India to cover 90% of the trade and may demand the inclusion of agricultural goods too. "EU is not a major exporter of agricultural products. With others like Asean, there may be some competition but it is a less difficult subject between India and EU," European Commission’s director general for trade David O’Sullivan told TOI.

Besides, he said, there will be a sensitive list for products where tariffs have to be reduced by a lower margin. To make things worse, Brussels wants the coverage of the CECA to be expanded to cover most items on the India-EU trade list.

For the last several months, the government has been under pressure from the plantations lobby to ensure that they are not hit due to more competitive imports from Asean members, particularly in the post-FTA regime where duties are proposed to be reduced further. Even Congress president Sonia Gandhi had communicated concerns on the FTA.

But farm goods are not the only contentious issue. Sullivan, who is in India to do the groundwork for commencing talks for EU’s CECA, indicated that the trading bloc also wants procurement, which means sourcing by government, to be handled through the bilateral trade deal. In the past, India has opposed the subject saying that the cost of procurement will go up.

Similarly, Brussels wants European companies to get the same treatment as their Indian counterparts. While India is open to granting post-establishment benefits or treat all companies at par once investment has been made, it is against pre-establishment sops as it believes that the move would give them undue advantage.

But these are the issues which are expected to be thrashed out in the coming months as negotiations pick up. The EU
Parliament is yet to give its negotiators the mandate to start the talks.

For the moment, India seems to have won a temporary reprieve in its dispute with the European Union over reduction in import duty on wines and spirits.

But it seems to have got just a fortnight to act - that’s till the Budget - to ensure that states do not levy any duties in lieu of excise.

 source: Times of India