Financial Express | 10 May 2008
Govt asks EU to lift ‘paranoid’ health-related trade barriers
Arun S
In a move that may help negotiators to move ahead with the proposed India-European Union free-trade agreement (FTA), the government has forwarded two significant suggestions to the EU to settle the wrangling on it’s health-related trade rules.
The EU’s reluctance to make safety and health measures of farm products more amenable to Indian exports and avoiding discussions on a mutual recognition pact on laboratory testing standards are major hurdles in the talks.
India has now called for lifting of the EU’s Rapid Alert System for Food and Feed (RASFF) and a similar system called RAPEX for non-food consumer products. These rapid alert systems restrict the marketing and use of any such product that is found to be posing serious and immediate danger to consumers’ safety and health by swiftly exchanging information.
According to India, this could be seen as a paranoid reaction from the EU authorities that would potentially harm exports from India. India has pitched for a joint appeal system, whereby affected exporters can file an appeal against a laboratory report given by either EU or India, on the basis of which the consignments are rejected. It has demanded incorporate the two new proposals in the final draft of the FTA.
RASFF and RAPEX fall under both health-related trade restrictions like Sanitary and Phytosanitary measures (SPS) and Technical Barriers to Trade (TBT). While SPS deals with health protection measures of foods and drinks, TNT measures include technical requirements and procedures on most topics from shape of food packages to car safety and energy saving equipments.
As per the officials, what is troubling India is that after one such rapid alert by a country, all other EU member countries would do a thorough check of several subsequent consignments. This adds to delays and costs of exports from India, especially since the EU has not yet unified and electronically linked the customs procedures of member countries.
Belgium, which is the most lenient, does such checks on three subsequent consignments. Greece, the strictest in this regard, has not put any limit on subsequent checks after a rapid alert. Moreover, European buyers are reluctant to purchase any item put on such a rapid alert.
Officials said EU’s measures were acting as non-tariff barriers (NTB) meant to protect their domestic industry. Analysts say that the EU is a leading user of such SPS and TBT measures. India sees it as a non-transparent and protectionist measure, rather than a genuine safety one.
Pranav Kumar, policy analyst, CUTS International, which tracks the India-EU FTA closely, said, “These stringent food standards of EU will affect India ’s market access in EU. Usually developing countries find it tough to match the EU standards. Therefore in WTO’s SPS agreement (on food safety), there is a clause for mutual recognition of standards, whereby India and EU can recognise each other’s food standards. But so far, there is no progress in this, as developed countries are not keen on recognising the standards of developing countries.”
Biswajit Dhar, head of the centre for World Trade Organisation (WTO) studies at Indian Institute of Foreign Trade, reckons that the main reason for India insisting on including these new proposals in the FTA would be to create a window for quick disposal of disputes bilaterally, rather than take it to the WTO, which could be a long-winding process.
“The average tariff of EU is very low, except for some products where India has an export interest. Therefore India ’s market access opportunities are not hinged on EU’s tariffs. What India is doing is to focus on bringing more transparency in EU’s SPS and TBT measures and a quick redressal of all disputes arising due to these measures,” Dhar said.
The FTA discussions between India and EU began last year and are being closely watched by several other countries, especially due to the deadlock at the WTO’s Doha Round talks. But the talks are moving at a snail’s pace due to difficulties in obtaining a consensus among the EU’s 27-member nations on several issues. Owing to these disagreements on details, India had postponed the deadline of completion of the trade agreement with the European Union from 2008-end to 2009-end.
Though EU trade commissioner Peter Mandelson had insisted that open and competitive public procurement as well as clauses on competition policy be a part of the agreement, India is not very keen on it. On the other hand, India wants EU to cut the high tariff and support on agricultural products. However, EU is reluctant to do so. Instead, they want India to reduce its industrial tariffs, which is already a contentious issue in the Non-Agricultural Market Access (NAMA) negotiations in WTO’s Doha Round.
Commerce and industry minister Kamal Nath had said that India has offered to include 90% of the items it trades with the EU to be included in the agreement, while it wants the EU to bring 95% of their tradable items within the pact’s purview. EU wanted India to eliminate barriers to trade in services and have more deep talks on intellectual property protection. The EU is a significant trading partner, accounting for about 20% of India ’s total trade. It is also one of India ’s major sources of foreign direct investment with around $12 billion worth FDI flowing from EU to India so far.