India seeks lower non-tariff barriers, easier mobility; EU wants major duty cuts in potential FTA
CNBCTV18 - 27 November 2024
India seeks lower non-tariff barriers, easier mobility; EU wants major duty cuts in potential FTA
By Abhimanyu Sharma
Several important issues pertaining to bilateral trade emerged between India and the European Union (EU) in the 10th round of negotiations for a potential Free Trade Agreement (FTA) recently held in Brussels. Indian government sources have indicated that India has sought lower duties, removal of non-tariff barriers and ease in mobility rules from the EU.
India is learnt to have sought easier investment rules as part of a package with relaxed norms for trade in services, including a cumulative increase in visas for skilled professionals at a bilateral level with the 27-member bloc of European countries.
Meanwhile the EU has sought unprecedentedly higher import duty cuts by India, much more than those offered under its current FTAs, seeking that the existing India-EFTA trade deal shouldn’t become the benchmark for a potential FTA. Both India and EU are learnt to have expressed reluctance to open up their respective dairy and agricultural sectors for foreign trade owing to local sensitivities.
The 9th round of negotiations was held from 23rd to 27th September, where discussions were held on 20 policy areas across 78 technical sessions. Both sides had focused on core trade issues covering Goods, Services, Trade, Investment and Government procurement along with necessary rules like Rules of Origin, SPS (Sanitary and Phytosanitary Measures), TBT (Technical Barriers to Trade) and trade remedies.
Earlier, India had expressed its opposition to EU’s Carbon Border Adjustment Mechanism (CBAM). Slated to come into effect from 1st January 2026, CBAM will initially be applicable on 7 carbon-intensive sectors including Aluminium, Cement, Fertilizers and Steel. In the past few months, both the Finance Minister Nirmala Sitharaman as well as Commerce and Industry Minister Piyush Goyal have criticized CBAM as violative of global trade rules, even as the domestic industry is fearing loss in prospects for exports.
India is also set to oppose the European Union Deforestation Regulation (EUDR) at global multilateral fora and term it as a protectionist measure. India’s view doesn’t find the definition of forests listed in EUDR in line with globally recognised definitions, as it doesn’t include the area of total tree canopy.
Stressing on the need to ensure distinction between product-based standards and non-product-based standards, government sources had told CNBC TV18 that several standards for furniture in EUDR, which succeeded the EU Timber Regulation, do not directly apply to Indian products. Sources explained that exports of Indian furniture can’t be subjected to European standards due to difference in wear and tear, climatic conditions and treatment of the wood used.
Sources added that EUDR’s definition for forests exempts several plantations in Indonesia and Malaysia as well as forests in Brazil, which has promoted these countries to also questioned EUDR’s scope and applicability.
As per the European Commission, the EUDR aims to "ensure that a set of key goods placed on the EU market will no longer contribute to deforestation and forest degradation in the EU and elsewhere in the world". The EU is slated to come into effect for large enterprises from 30th December 2024 and for SMEs from 30th June 2025. The regulation is slated to impact exports of cocoa, coffee, timber, rubber, and palm oil to Europe.
