Times of India | 10 Oct 2006
’India, UK need new free trade pact’
Rashmee Roshan Lall
LONDON : Britain and the European Union urgently need an unprecedented new free trade pact with India, the UK’s leading organization representing 240,000 businesses and 80 of the FTSE’s 100 companies has demanded.
In the boldest appeal yet for a massive upgrading of Britain’s warm-if-slightly-underdeveloped business relationship with India, Richard Lambert, the director-general of the Confederation of British Industry (CBI) said that despite strong historical ties, the full potential of economic links between the UK and India was being held back.
The CBI, whose member businesses employ around a third of the UK’s private sector workforce, altogether, is considered an important player in the construction of Britain’s policy and business architecture.
Lambert’s call came at the start of the India-UK Investment Summit, which dovetailed (ON TUESDAY) with the annual meeting of Prime Ministers Tony Blair and Manmohan Singh under the terms of the September 2004 joint London declaration.
Lambert called for a comprehensive and business-focused free trade agreement between the EU and India, which complies with WTO rules, and acts as a complement to the multilateral system, not an alternative.
Pointing out that India still accounted for only a measly one per cent of the UK’s external trade, Lambert said, "India has a rapidly growing economy and as today’s many investment announcements prove, there are some solid examples of UK companies trading successfully with India. The UK provides more direct investment into India than France, Germany or Japan; and well over half of India’s outward investment into Europe comes to the UK. There have been some real achievements to date, such as the air services agreement, which stand to bring real benefits to both sides."
He said the tiny volume of bilateral trade could perhaps be explained by "regulatory barriers and other restrictions (which) make it very difficult for UK businesses to invest in India, particularly in areas where we have much to offer, such as the retail, financial and legal services sectors."
The CBI, whose member companies include some 200,000 small and medium-size firms, more than 20,000 manufacturers and more than 150 sectoral associations, has long been pushing for India to open its markets in the banking, insurance, retail trade and legal consultancy sectors.
Lambert said that the bold new free trade pact his member-companies wanted would not mean the death of Doha. In a reference to the stalled Doha round of global trade talks, he stressed that "There is no question (it) must remain the priority for both sides. The multilateral system provides the best method of making global trade freer and fairer. As a key emerging economy, India has a lot to gain from trade liberalisation and it must play a leading role in the talks. Negotiators must restart the WTO talks as soon as possible, armed with meaningful new offers."
But just hours before Lambert’s remarks, Indian commerce minister Kamal Nath told this paper that there was nothing to say about Doha because no one seemed to have any new ideas on how to revive the talks.
Perhaps in an admission of realpolitik, Lambert added that "at the same time, we must also look at boosting market access bilaterally. A robust and thorough agreement between the EU and India could ensure that trade becomes more open, to the benefit of all."