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India rejects EU demand on social clauses in trade pact

The Hindu Businessline | 11 March 2010

India rejects EU demand on social clauses in trade pact

Arun S.

India has rejected the European Union’s demand on including social clauses such as labour and environmental standards in the proposed Free Trade Agreement (FTA), saying there are other forums to discuss these issues.

Responding to the EU Trade Commissioner, Mr Karel De Gucht’s recent statement that he was hopeful of addressing social issues in the FTA with India through “appropriate language,” the Commerce Secretary, Dr Rahul Khullar said, “There are certain non-negotiables for us. If they (EU) don’t accept FTAs without social clauses, then I’d say tough luck.”

“If you (the EU) want to do a bilateral trade deal, it comes on terms which are acceptable to both, otherwise it doesn’t come,” Dr Khullar told Business Line.

He said at present the proposed India-EU pact is not even called an FTA, adding, “It is only called a broad-based bilateral trade and investment agreement.”

This implies that New Delhi will go in a phased manner to liberalise its trade in goods and services with 27 member countries of the EU. On full implementation, FTA entails barrier-free flow of goods between the signatories.

Mr De Gucht had said the inclusion of labour and environment issues in the pact is not specific to India as the EU has these it in all its FTAs.

“The European Parliament won’t agree to a deal that’s silent on these,” he had said.

No backdoor entry

Dr Khullar said India will not allow backdoor entry of non-trade related issues in its FTAs and this was made clear to the EU in the recent discussions too.

“Whether these issues go under the guise of sustainable development or whether they come in the form of labour or environmental standards, our answer is a simple ‘no’,” he said.

He said allowing such non-trade issues in the FTA may lead to the talks getting diverted to issues like human rights, minority rights and animal welfare.

“Is the FTA about trade or politics, the EU should make up its mind,” he said.

There are forums other than bilateral and multi-lateral trade negotiations where the EU can raise these issues, Dr Khullar said.

 source: Hindu Businessline