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Political opposition to EU-India FTA gathers momentum

SUNS North-South Monitor 13.5.2013

Political opposition to EU-India FTA gathers momentum

New Delhi, 13 May (Ranja Sengupta) — Leaders of the main opposition parties in India came together recently in New Delhi to voice their opposition to the proposed Bilateral Trade and Investment Agreement (BTIA) between India and the European Union.

In a visibly defiant display, the politicans asked that the matter be discussed first in the Indian parliament. They also released the "Delhi Declaration on the EU-India FTA" which outlined their strong concerns on various aspects of the trade agreement and their urgent message to the government to put in place certain safeguards including a parliamentary ratification process for ensuring a fair and inclusive trade policy that benefits the people of India at large.

The BTIA, or free trade agreement (FTA) in general terms, has been negotiated since 2007 and concluding negotiations are expected on 15 May ahead of a Ministerial between the two sides in June.

Talks now hinge on issues of automobile tariffs, access for Indian professionals to the EU, data secure status for India, and India’s domestic legislation on raising foreign direct investment (FDI) limits in the insurance sector.

It is not clear where talks on agriculture, intellectual property rights and investment, areas of strong demands by the EU which have seen much opposition by civil society organisations, are currently poised.

Industry bodies, farmers’ organisations, civil society organisations (CSOs), patients’ groups and other stakeholders have repeatedly raised concerns about this FTA for some time now.

India’s largest milk cooperative Amul and the Society of Indian Automobile Manufacturers have already expressed strong objections to the proposed duty cuts under this FTA. Major opposition parties have also expressed growing dissatisfaction over the process of negotiations as well as substantive adverse impacts expected from this FTA.

In a first of its kind, at least on FTA issues, senior leaders from the Bhartiya Janata Party (BJP), Communist Party of India Marxist (CPI-M), Janata Dal United (JDU) and other Parties joined together to reject the proposed FTA. They unanimously agreed that not only does this particular FTA undermine the democratic principles of policymaking in India, it can also have significant adverse impacts on large constituencies within the country.

The major move came at a roundtable conference on 3 May, on the "Impact of India-EU FTA on Indian Economy", organised by the Confederation of All India Traders and the Forum Against FTAs, a network of about 168 NGOs, farmers’ organisations, trade unions, academics and others.

Speaking on the occasion, Dr. Murli Manohar Joshi, senior BJP member of parliament and Chairperson of the Public Accounts Committee (PAC), said that "the secrecy around these negotiations does not suit the largest democracy of the world. All such international treaties must be ratified by the Parliament, especially those that impinge on India’s policy space, undermines the powers of the parliament, alters the federal structure, or tramples upon the fundamental rights of the people including food security and health".

Dr. Joshi also warned that "there will be serious political fallout in the country if this FTA goes through. The 2014 elections will be the acid test for the government".

The FTA has been criticised by CSOs and other stakeholders for being conducted in secrecy with no sharing of negotiating texts or impact assessment studies, either with stakeholders, state governments or the national parliament.

The President of Janata Dal (U) and Convenor of the National Democratic Alliance (the opposition coalition), Mr. Sharad Yadav, said: "this FTA will be against the interest of India’s large majority, the downtrodden and the humble mazdoor, as it will bring in huge European imports into the country. The government has conspired with the EU to unleash this FTA on the Indian people".

Mr. Basudev Acharya, Chairperson of the Standing Committee on Agriculture, and member of CPI-M, said, "the Committee is seriously concerned and has already called upon the government not to open up India’s dairy sector to EU’s heavily subsidised products under this FTA. We are also looking at other products in agriculture which will also see unfair competition and will work against India’s farmers and agricultural workers".

High-level political leaders such as Sitaram Yechury (CPI-M) and A. B. Bardhan (CPI) sent words of support and expressed their concerns at the insistence of the EU to impose damaging provisions on a developing country like India through this FTA.

The roundtable was attended by more than 100 participants representing experts on trade agreements, economists, retail traders’ organisations, CSOs, trade unions, farmers’ organisations, industry representatives and patient groups.


Mr. Praveen Khandelwal, Secretary-General of the Confederation of All India Traders (CAIT), said that "the very framework of the FTA is flawed and it undermines national legislative processes by trying to push the Insurance bill to increase FDI cap from 26 to 49% at the behest of the EU".

Dr. Kavaljit Singh, Executive Director of Madhyam, a New Delhi-based non-profit organisation devoted to research and public education on economic and developmental issues, said that "Under no circumstances should India agree to liberalise the banking and insurance sectors till the regulatory issues raised by the global financial crisis are resolved".

Dr. Amit Sengupta from the International Peoples’ Health Movement argued for a "strong stance against strong enforcement measures suggested in the IPR

(intellectual property rights) chapter by the EU, as this will threaten the very existence of the generic drug industry and severely undermine access to medicine in India and the world".

"The EU proposals even suggest bringing third party liability under enforcement, thus potentially criminalising use of generic medicines by even humanitarian organisations," he added.

Arguing that agriculture is being sold out for narrow gains in services, Shri Naresh Sirohi of Bhartiya Kisan Morcha (a large farmers’ organisation in India), argued that "as long as the EU continues to give agricultural subsidies which cannot be negotiated under an FTA, India should not even consider bringing agriculture under the negotiations".

Other farmer leaders such as Krishna Vir Chaudhary (Bharatiya Krishak Samaj), and Yudhvir Sigh (Bhartiya Kisan Union) also supported a "no negotiation" stance on agriculture with developed countries such as the EU which gives huge agricultural subsidies that cannot be negotiated under an FTA.

Mr. Satish Garg, National Organising Secretary of CAIT, suggested that it will be suicidal for the government to agree to the EU’s demand to lock in current FDI liberalisation in retail under this FTA, making any future policy reversal impossible, especially when a domestic debate on this matter is still ongoing.

The political leaders pledged to start a Parliamentary Forum on Economic Affairs that will oversee economic policymaking and ensure critical review of key policies. Their "Delhi Declaration on the EU-India FTA" contains their strong concerns and an urgent call to the government to put in place certain safeguards including a parliamentary ratification process for ensuring a fair and inclusive trade policy that benefits the people of India at large.

In a series of letters, the Society of Indian Automobile Manufacturers (SIAM) has for some time, strongly worded its opposition to proposed duty cuts by 50% on completely built cars, arguing that this will flood the Indian market with high-value luxury cars made in Europe and destroy the buoyant but still nascent automobile industry in India.

In a recently released White Paper, SIAM also argues that this will undermine the longstanding government policy of combining high import duties with open FDI policy that attracted investment in India and will discriminate against non-European producers.


In a letter to Commerce Minister Mr. Anand Sharma on 22 March, Amul, India’s largest dairy cooperative, said "the proposed India-EU FTA on Agri/Dairy sector is likely to cause severe disadvantage to the farmers and consumers of India if the same is agreed to. We request you on behalf of 80 million farmers that we need to put a counter case to ensure that the economic and commercial rights of farmers and consumers are not compromised."

Amul argued that geographical indication protection and import duty cuts on the EU’s subsidised dairy products will significantly raise India’s imports from the EU, affecting farmers’ markets as well as the future processing potential of the country.

Amul is India’s first milk cooperative which revolutionised the milk market in India by involving small dairy farmers, mostly women, to sell to the cooperative at better rates and under healthy conditions, spurtring India’s "white revolution". Managed by the Gujarat Co-operative Milk Marketing Federation Ltd., Amul is jointly owned by three million milk producers in the state of Gujarat.


The joint political position is not the first articulation of such political opposition to the FTA, though it is definitely a first in its unified approach. While the BJP and the CPI (M) have issued statements against the FTA in the past, matters escalated before the visit of Prime Minister Manmohan Singh to Germany around the middle of April. On 10 April, while the Prime Minister was in Germany talking about the FTA with German Chancellor Angela Merkel, Dr. Murli Manohar Joshi held a one-hour press conference to warn the government not to sign the FTA without a political consensus.

Dr. Joshi had pointed out that "the UPA (the ruling United Progressive Alliance led by the Congress party). government is now engaged in the final phase of the negotiations for the highly controversial Free Trade Agreement (FTA) with the European Union without taking into account the opposition by several development experts and many stakeholders. Irrespective of ideological considerations, the conditions which, according to reports, the UPA government is willing to concede to EU will seriously jeopardise the interests of the Indian people with no obvious gains in trade or economic expansion."

He further said that "once the FTA becomes active, the EU will flood the market with products in dairy, poultry, sugar, wheat, confectionary, oilseeds, plantation products and fisheries, some of which are strategic for India. This will directly compromise India’s agricultural sovereignty and its food security. Obviously, an FTA which talks only about tariffs, and not about trade-distorting tricks such as subsidies and other incentives is detrimental to our agriculture."

"Another area that will impact India is opening up of procurement in central and state government institutions. This is the lifeline of many of Indian industries and medium and small enterprises, including small businesses run by women and other disadvantaged communities. If this is opened to the EU, the SMEs (small and medium sized enterprises) will find it extremely hard to survive," Dr. Joshi stressed.

He had also raised concerns regarding intellectual property rights and access to medicines as well as provisions related to investment protection.

In a statement released on 5 April, ahead of the Prime Minister’s departure for Germany, the Polit Bureau of the CPI (M) urged the government to "stop this Indo-EU Free Trade Agreement". It said that "The Communist Party of India (Marxist) expresses deep concern that negotiations on the Bilateral Trade and Investment Agreement between the European Union and India, has proceeded without any due scrutiny by Parliament or other democratic institutions."

The statement further pointed out that "the agreement is likely to worsen the already burgeoning current account deficit and trade deficit. Evidence from trade agreements that India has already entered clearly indicate that they further worsen the country’s trade deficit".

"The intellectual property, investment and government procurement chapters of the agreement will have a negative impact on virtually every area of economic activity — including agriculture, industry and services," the statement added.

Not mincing words, the party stated "the CPI(M) is particularly concerned that the entire negotiating process has been non-transparent, with a total lack of public consultation with affected sections, parliamentary oversight, or the involvement of state governments. Despite repeated expressions of concern by political parties including the CPI(M), the government has moved forward with the process, shunning even a modicum of effort to arrive at a political consensus on the issue. The Parliamentary Standing Committee on Commerce is examining the impact of FTAs but the government’s determination to sign the EU-India BTIA without waiting for the Committee’s report betrays a shocking disregard for parliamentary democratic institutions."


In significant public displays of dissatisfaction, two major standing committees of the Indian parliament have also expressed concerns about the processes and content of the proposed FTA.

In an unprecedented move, the Standing Committee on Commerce, which is currently hearing from the public on the matter of "India’s Engagement with Free Trade Agreements: Challenges and Opportunities", issued a warning to the Indian government not to sign the FTA with the EU in the meantime.

Significantly, this public announcement came on 11 April while the Prime Minister and the Commerce Minister were in Europe. Even more noteworthy was the fact that this statement was endorsed by each and every member of the 31-member Committee including 12 members from the ruling party and its allies.

Mr. Shanta Kumar, the chairperson of the Committee, in a strongly worded letter to the Prime Minister, suggested the signing should wait and "let the committee deliberate on the issues raised first".

The Hindu, a leading national newspaper, reported Mr. Kumar as saying, "I have urged him that serious doubts have been raised over the fallout of the various decisions likely to be taken in the FTA. We have said the country could continue to negotiate the FTA but it should refrain from signing it till all doubts are cleared on protecting of interests of the country".

"There are reports that the negotiations with EU are all set to be concluded shortly. So the committee decided unanimously that our concerns should be conveyed to the Centre (the national Government)," Mr Kumar told leading newspapers.

As the panel is considering the representations of several industries, non-governmental organisations and farmers’ associations against the FTA, "we felt that the Government should wait for the Committee’s report on the subject, ‘India’s Engagement with Free Trade Agreements: Challenges and Opportunities’, before it proceeds to sign any FTA," Mr. Kumar was reported to have said.

In another development, the Standing Committee on Agriculture asked the government to protect the interest of the dairy sector in the FTA negotiations with the EU. "The Committee desires that the interest of dairy producers in the country which is paramount be protected from monopolistic, discriminatory and lopsided trade practices," newspapers quoted.

The parliamentary panel discussed the issue related to the India-EU FTA while examining the Department of Animal Husbandry, Dairying and Fisheries’ demands for grants for 2013-14 fiscal, and urged the government "not only to ensure a level-playing field (to the local industry) but also prevail upon the EU to accord concessions for their (India’s) domestic dairy producers." The Committee expressed hope that the government would take adequate action.

The spate of hitherto unforeseen expressions of concern by parliamentary standing committees and the increasing unity of political parties on the proposed EU-India FTA are clear pointers that there are significant issues which the governments of India and the EU have failed to take into account.

Notwithstanding the process issues within India, the EU’s persistent demands on a developing country to liberalise trade and investment in several areas that will also affect India’s domestic policy space including its legislative processes, are raising increasing political and social opposition, not only in India but across the world. +

 source: TWN