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In India-EFTA talks, balanced trade and access to services, IPR are key

Hindustan Times | 16 May 2023

In India-EFTA talks, balanced trade and access to services, IPR are key

By Rezaul H Laskar, Rajeev Jayaswal

NEW DELHI: Negotiations between India and the European Free Trade Association (EFTA) on a trade deal will have to address a trade balance that favours the four European nations in the grouping and tricky issues such as access to Indian markets for services and intellectual property rights.

India and the EFTA, which comprises Iceland, Liechtenstein, Norway and Switzerland, agreed last month to resume negotiations on a trade and economic partnership agreement (TEPA) following a push from the European states, officials familiar with the matter said.

The deal aims to include trade in goods and services, agriculture, investment, government procurement, competition, intellectual property rights and technical cooperation, an Indian official said on condition of anonymity. The scope of the comprehensive deal may also include sanitary and phytosanitary measures (SPS), technical barriers to trade (TBTs) and dispute settlement.

“Although EFTA is not big in terms of trade volumes as compared to recent free trade agreements (FTAs) with the United Arab Emirates (UAE) and Australia or other deals under negotiation, the grouping has its strategic economic significance,” the official said.

However, negotiations will have to account for two-way trade being skewed in favour of EFTA states. India’s total trade with the four countries during 2021-22 was $27.23 billion, with a deficit of more than $23.7 billion. The imbalance mainly arises from Switzerland’s exports of bullion and precious metals to India.

Helene Budliger Artieda, the Swiss state secretary for economic affairs, said in an interview with HT earlier this month that negotiations will have to resolve a number of issues, especially market access for services, intellectual property rights and rules of origin.

“There is a shared will and commitment to tackle the outstanding issues and to bring these negotiations to a successful conclusion...we can build upon existing work. In many areas, we have complementary markets and I am optimistic that we can find solutions which are beneficial for both sides,” she said.

Indian officials said there are possibilities for collaboration in areas such as healthcare, telemedicine, education and technological advancements. SPS measures and TBTs are major issues for Indian exporters with this trading bloc as Indian rice exports had faced some cases of rejection over pesticide residue in 2021.

“A comprehensive deal is a win-win for both. Recently, when most developed economies faced uncertainty due to supply chain disruptions, India emerged as a reliable partner. EFTA can rely on India for friend-shoring and India will get opportunities to increase its exports to these countries to achieve balanced trade,” the official cited above said.

Budliger Artieda said EFTA states are “interesting markets for India” and represent untapped potential for smart investments. EFTA states are also leaders in global innovation and technology and are “willing to bank on India’s impressive path towards more participation in global value chains”, she said. She, however, noted it will be important to include labour and environmental provisions in any deal.

India’s key imports from these four countries are gold ($20.7 billion in 2021-22), silver, coal, pharmaceutical products, vegetable oil, dairy machinery, medical and scientific equipment, and petroleum crude. It exports chemicals, iron, steel, gold, precious stones, yarns, sports goods, glassware and bulk drugs to these nations.

A meeting attended by commerce minister Piyush Goyal in Brussels on May 14 saw significant progress in taking forward the talks between India and EFTA states, a second Indian official said. The meeting discussed modalities of engagement for working towards a comprehensive deal.

“Both sides emphasised the importance of building their discussions on principles of trust and respect for each other’s sensitivities to achieve a fair, equitable and balanced agreement. Indeed, a TEPA between EFTA and India could bring significant economic benefits, such as integrated and resilient supply chains and new opportunities for businesses and individuals on both sides leading to increased trade and investment flows, job creation, and economic growth,” said a joint statement issued after the meeting.

Switzerland is also important for India in the context of foreign direct investments (FDI). It has been the fifth top FDI sourcing nation after Singapore, the US, Mauritius and the Netherlands, according to the UNCTAD World Investment Report 2022. Switzerland is also India’s largest trade partner among the EFTA states.

“An FTA with EFTA countries will have a positive impact on India’s services exports at a time India is eyeing a foothold in Europe’s services market and negotiating FTAs with the UK and the EU. On the goods side, it may facilitate Indian labour-intensive exports, while offering higher choices to Indian consumers without flooding the domestic market,” said Gautam Khattar, principal at consultancy firm Price Waterhouse & Co LLP.

“Importantly, the India-EFTA FTA may contribute to diversifying India’s trade basket with regard to EFTA countries, which at present is largely limited to gold and other precious metals.”

 source: Hindustan Times