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India to EU: Can’t sweeten trade pact

Times of India | Jun 20, 2013

India to EU: Can’t sweeten trade pact

Sidhartha, TNN

NEW DELHI: The government has run out of patience and will ask the European Union to sign a free trade deal "within a narrow political window" as India is unwilling to offer further tariff cuts for automobiles and has no room to provide flexibilities on pharmaceuticals and government procurement.

Top government sources said commerce & industry minister Anand Sharma has been advised to deliver a stern message to Karel De Gucht, his European counterpart as EU’s list of demands seem unending even seven years after negotiations began. Sharma could not be reached for comment as he was travelling overseas, while commerce department officials refused to comment.

On India’s demands, EU has refused to grant "data secure" tag to information technology companies and instead give data adequacy status, something that has also been given to the US. Data secure status will make it easier for mid-rung Indian companies to bag contracts in most of Europe. The sources said the issued raised on pharma related to pricing regulations, patents, counterfeit medicines and access to cheap drugs, which do not relate to FTAs, a position that has been clearly articulated to Brussels on several occasions.

Similarly, on government procurement, EU has demanded commitments based on the proposed public procurement law, which has not even been placed before Parliament. While India is willing to engage on the issue once the law is enacted, the trading bloc sees it as a critical element of any deal. EU is pushing for preference in government purchases for European companies, which is unacceptable to India. New Delhi has said it will only ensure that orders above a specified value are bid out and European bidders are not at a disadvantage.

The third issue that is holding up talks is EU’s demand for a steeper tariff cut on automobiles that goes beyond the government’s offer to lower import duty to 10% for a specified number of vehicles, and reduce it to 30% for cars beyond the threshold. But EU wants a shift towards zero duty and government says it is not possible.

The sources said EU is raising issues at the last minute, while the political window for a deal is narrowing given the impending general elections next summer. They pointed out that Indian negotiators had participated in the talks last month with the impressions that negotiations have to be concluded soon. But EU doesn’t seem to be heading for a political closure before September — instead of the agreed deadline of July. As a result, signing the deal cannot take place before March or April 2014, when India will be in the midst of general elections.

 source: TOI