20 May 2010

India may use EU drug suit to turn FTA talks in its favour

KARTIKAYMEHROTRA

By formally declaring their willingness to take the European Union (EU) to the World Trade Organization’s (WTO) dispute settlement court last week, India may be using the looming legal dispute as leverage to control the free trade (FTA) negotiations which have hit a snag on social issues.

Although the EU said it would like to resolve FTA negotiations by October, the Indian camp believes the agreement still contains too many holes in key areas and will require detailed negotiations — including a more detailed services agreement — before it takes shape as a document worth signing, said ministry officials.

Teaming with an aggressive stance from Brazil, India has commenced an assertive approach aimed at changing the EU’s policy and legislation which led to the seizure of around 20 shipments of generic medicines since 2008.

Although EU authorities, nor Dutch or German customs, have detained drugs since India raised its voice in opposition in 2009, the cock is ticking on the dispute reaching WTO court. “We have entered into consultation stage which will take between two to three months,” said Commerce Secretary Rahul Khullar. “Once that is done, a party can say ‘we are fed-up’; then it is time to move to dispute court.”

Outside experts believe India is confident it could win in WTO court and is using the potential suit either as leverage to resolve contentious matters in the FTA, or to delay completion of the agreement altogether. “The timing could actually be a summation of the pressure we are under in the FTA context,” said Biswajit Dhar, Director General of think-tank Research and Information Systems for Developing Companies (RIS).

“Commerce ministry officials have been telling that the government is interested in delaying this whole FTA process... because several things are not in place, including services which is of immense interest to us.”

The European Union (EU)’s Director General for Trade will be here next week for secretary level dialogue with Khullar which will undoubtedly feature the contentious free trade negotiations and India’s legal actions against the European Union.

“With David (O’Sullivan) here next week, I’m sure those issues will come up,” Khullar said.

"We are confident that a dispute on this issue will not be necessary and that our consultations will help give clarity as regards the EU intentions,” said European Union Ambassador to India, Danielle Smadja.

The drugs headed for Brazil included HIV/AIDS, Alzheimer’s disease, heart conditions and other life-threatening ailments were among the drugs seized.