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India-EU FTA talks in crucial phase

Times of India

India-EU FTA talks in crucial phase

By Surojit Gupta, TNN

21 April 2011

PARIS: Negotiations between India and the European Union (EU) for a Free Trade Agreement (FTA) have entered a crucial phase and contours of the deal have started to emerge but there are still some issues which need to be resolved, EU official say.

India and the European Union have concluded nearly 12 rounds of negotiations on the FTA and are expected to meet again in early May or June. Indian officials say both sides are making efforts to sign the deal within the current year.

EU is one of India’s leading trade partners and Indian exports to Europe have expanded over the years. Both EU and India expect substantial gain in their trade in goods and services from the FTA, negotiations for which were launched in 2007.

New Delhi has also signed several bilateral trade agreements including with the Association of South-East Asian Nations (Asean), Japan and Korea and is discussing such pacts with Malaysia and Thailand.

EU officials say the FTA is crucial for Europe at this juncture as it grapples with economic woes and a free trade deal with India would provide access to one of the fastest growing economies and markets. Both sides agree that the deal would be mutually beneficial.

EU officials hope that the India FTA would help trigger FTAs across Asia.

EU is discussing FTA with Vietnam and has concluded an FTA with South Korea. But at the same time, EU is committed to the multilateral trade process and would want an early conclusion of the Doha round of trade talks.

"The discussion between Indian and EU negotiators have entered a crucial phase. Coming weeks and months will see hectic talks but we are starting to see contours of the deal emerging," a senior EU diplomat who did not wish to be identified said. Officials were tightlipped about specific details of the negotiations.

India has concerns over opening up autos and auto components and agriculture while EU wants stricter enforcement of intellectual property rights. The inclusion of automobiles in the FTA has split car makers with some domestic players opposing any move to cut duty on imported cars while foreign car manufacturers including foreign luxury car makers such as Audi, Mercedes and BMW are batting for lower tariffs.

Domestic auto majors have opposed any move to lower tariffs on imported automobiles for years and have argued that cheaper imports would lead to job losses and would not boost local manufacturing.

EU officials say they would like to draw some lessons from the FTA it concluded with South Korea and hope that differences on such issues with India can be narrowed down. EU officials say they are communicating with citizens across Europe about the benefits of the FTA with India.