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India reluctant to relent on greater market access to EU

Live Mint | 4 February 2010

India reluctant to relent on greater market access to EU

European Union’s demands for 90% tariff elimination and access to govt procurement remain unresolved

(Graphic: Ahmed Raza Khan / Mint)

Asit Ranjan Mishra

New Delhi: Talks on a free trade agreement (FTA) between the European Union (EU) and India are stuck on the issue of additional market access, although the EU said progress had been made during the eighth round of negotiations in New Delhi late last month.

The EU’s demands for more than 90% tariff elimination and access to government procurement remain unresolved.

“Talks were very comprehensive, very constructive, both sides managed to cover all issues,” said Daniele Smadja, EU’s ambassador to India. “However, differences remain and it is not like we are saying we will sign the agreement tomorrow.”

Smadja declined to spell out the areas where the EU wants additional market access.

Before the 25-29 January talks, additional secretary in the commerce ministry P.K. Chaudhery, who heads the Indian delegation, said both sides offered to eliminate tariff lines in 90% of traded goods.

“How we tackle the rest 10% of sensitive items is a matter of negotiations,” Chaudhery had said, signalling India’s reluctance to relent on greater market access.

The EU wants tariff liberalization of customs duties on a large number of agricultural products to which India is firmly opposed, given the sensitivity of the issue at home.

The two sides started negotiations in June 2007 in Brussels for an agreement that was set to be India’s most ambitious as the EU is already its largest trading partner. While annual bilateral trade totals around €77 billion (Rs4.93 trillion), India ranks ninth on the EU’s list of major trading partners.

The proposed agreement is contentious, with non-governmental organizations opposing the deal. ActionAid, an agency that works among the poor, believes India and the EU are unequal partners and “any agreement would massively increase the extent of liberalization in the country”.

The two sides have several issues to thrash out over market access, Smadja said.

“We want to go beyond 90% of liberalization and there we have always said it is not easy, it costs something,” she said. “Even if we do not eliminate tariff in one day, it costs. This is an area where we need to work very hard.”

The EU would also like to see some relaxation by the Indians on government procurement, although India has made it clear that it won’t be part of the FTA talks.

“But you cannot prevent the EU to hope that at some stage the Indian government will contemplate some other possibilities,” she said. “Now we are seeing some interesting developments in India. India will be an observer in the WTO (World Trade Organization) agreement on government procurement. Maybe this will bring in some new opportunity.”

Smadja accepted, however, that both sides need to make more progress on intellectual property rights and investment. She said experts from both sides will meet before the next round of negotiations in Brussels in March.

Leena Menghaney, campaign coordinator (India) for access to essential medicines, Medecins Sans Frontieres, raised concerns about the EU’s insistence on stringent TRIPS- plus (trade-related aspects of intellectual property rights) measures.

“EU’s demand for data exclusivity, patent-term extension and intellectual property enforcement will make producing generic drugs by Indian companies very difficult,” she said. “India’s role in supplying life-saving generic drugs to Latin American and African countries is irreplaceable.”

Smadja was non-committal on whether the next round of talks will be the final one as earlier indicated by Chaudhery. “We hope that the new EU trade commissioner Karel De Gucht and (Anand) Sharma will meet as soon as possible after the next round of talks in order to assess the situation,” she said.

On non-trade issues such as child labour and human rights violations, which the EU has been insisting should be addressed under FTA, Smadja said there has been no change in its position.

“We have no reason to change position as we don’t have any right to change our mandate. These are sustainable development issues. It is in our mandate to raise all issues that involves sustainable development, including social, economic and environment aspects,” she added.

India is opposed to the inclusion of any non-trade issues in the agreement.

 source: Live Mint