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India-EU FTA may be delayed

India-EU FTA may be delayed

Posted online: Thursday , November 29, 2007 at 1919 hrs IST

Sharp differences on modalities for the proposed India-EU free trade agreement (FTA) have begun surfacing. It seems unlikely that the proposed FTA would be finalised by 2008, the deadline set by India.

Both the parties which met in Helsinki, last year agreed to have a bilateral FTA The EU Trade Commissioner, Peter Mandelson at the 8 th India-EU Business Summit organised in Delhi on Thursday, however, claimed that since a year matters were moving in the right direction. So was the Indian Commerce Minister, Kamal Nath.

"We have made positive movement but the watchword remains - ambition. We have reached the slope of the mountain and intend to climb to the top," said Mandelson and added that India-EU FTA would compliment the Doha Round and India would have access to the 450 million European market.

"What is important to me is the substance and not the deadline," he said.

However describing the bright prospects of the proposed FTA, Mandelson insisted that India make its public procurement policy open and transparent and opt to have a competition policy. Public procurement and competition policy are part of the controversial Singapore Issues, vehemently opposed by the developing countries and which caused derailment of WTO negotiations in the past. Nath when asked to comment assured, "controversial portions of the Singapore Issues will not form the part of the proposed FTA."

Mandelson identified manufacturing, services and agro-processing for the proposed FTA. WTO negotiations on manufacturing sector has got locked up in the controversial NAMA draft on the issue of tariff cuts. India needs to negotiate carefully with EU for the proposed FTA.

Mandelson said that India would gain in the manufacturing sector with European investment and technology. He said that India had professional skills in the service sector, but lacks infrastructure which can be made good through European investments. He said that India with a strong intellectual capital need not fear a stringent intellectual property regime.

When Nath raised the issue of the need to have an innovative agriculture revolution to feed the world, Mandelson said, "We are ready to invest in agriculture and want to see India agriculture transforms itself into a commercial activity."

Indian agriculture would have market access in Europe, he said. When pointed out about the subsidy regime and high farm tariff in Europe, he refused to comment.

Mandelson who arrived in India after his tour of South East Asian countries and China showered praises for the Chinese Economy and products. Nath was quick to reply saying most of the Chinese products entering India were sub-standard. He took exception to Mandelson terming India as emerging economy.

He said, "There is no classification like emerging economy as such. Classification exists like developed, developing and least developed economies. If we are an emerging economy, then you are a submerging economy."

He also said Indian companies has contributed to the FDI flows in Europe.

Nath was critical about the World Bank report which said that opening up of Indian agriculture would benefit subsistence farmers and questioned the bank’s credibility.

He was critical of animal welfare, labour and environment issues raised by the European NGOs and said, "If your NGOs can raise such issues amounting to protectionism, our NGOs can raise issues of subsidies and tariffs and force feeding."

Both Nath and Mandelson, however, agreed to work on non-tariff barriers and technical barriers to trade and respective each other’s sensitivities. "We are trying to work out the natural synergies between two countries," said Nath.