Ill-fated India-EU FTA gets new demand from Belgium

Business Standard | November 26, 2013

Ill-fated India-EU FTA gets new demand from Belgium

Also wants further tariff reduction on goods by India

Nayanima Basu | New Delhi

Belgium has demanded greater access to public procurement market for large-scale contracts under the proposed India-EU free trade agreement (FTA), whose fate already hangs in balance. The country also stressed on further tariff reduction on goods by India.

“We want to go further than the actual proposal. I know India wants to discuss on what has been proposed but European Commission thinks there is room to do more and open trade maybe for public procurement. We are facing some difficulties with intellectual property,” Didier Reynders, Belgium deputy prime minister and federal minister of foreign affairs, foreign trade told Business Standard in an interview.

This is a controversial demand that the EU had been insisting upon since it will give European companies the right to bid for all government purchase contracts. Belgium is India’s second largest trading partner within EU. Hence, it has a considerable say on the ongoing negotiations that seemed to have reached a hiatus.

Reynders, who is on a week-long visit to India accompanying Belgium Princess Astrid, also hinted of a possible interaction between EU trade commissioner Karel de Gucht and commerce and industry minister Anand Sharma on the sidelines of the WTO ministerial conference in Bali.

“There could be a meeting on the sidelines … We are not in a mood to conclude the talks just next month. There is a doubt whether it will come out with anything. We want new proposals on the table. It’s not that we are not in favour of a deal. We are having talks with US, Canada and Korea for bilateral deals. But, as I said, there is room for more,” Reynders said.

He, however, urged that the deal is closed before both sides head for elections next year.

On the other hand, under the proposed deal, India has demanded it be granted the ‘Data Adequacy’ status in order to get greater access in their services market for India’s teeming professionals.

“We are aware of India’s demand but this is not a good way. This has to be in line with international standards,” he added.

EU’s Data Protection Directive, under Article 25, states the criteria for assessing adequacy of data protection in a third country. This directive is now expected to be replaced by EU Data Protection Regulations, 2012 (Regulations) which under the category of transborder data flow states that transfer of data outside the European Economic Area (EEA) can take place to only those countries that ensure adequate level of protection. This is what makes the status so sought-after.

According to Nasscom, getting India declared as a data-secured country will increase revenues from EU to the extent of $7 billion per annum by way of increased off-shoring and cost savings to companies leveraging India in their business model.

Talks to have an FTA or bilateral trade and investment agreement (BTIA) started in 2007. However, both sides have failed to reach an agreement so far due to hardening of stance on tariff reduction and market access.