Negotiations on a free trade agreement (FTA) between the European Union, the world’s largest economy, and India, one of the world’s fastest-growing economies, took one more step towards completion today, with chief negotiators concluding 2-day talks in Brussels.
According to EU’s spokesperson on trade, John Clancy, the talks focused on the “overall state of play and next steps in the negotiations”. He added that more detailed technical discussions would take place during the next full negotiating round from October 6-8 in New Delhi.
Sources close to the negotiations on both sides are expressing cautious optimism about the possibility of concluding an in-principle agreement in time for the annual India-EU summit, to be held on December 10.
Negotiations on the core issues of trade in goods and services have reportedly seen real progress. The two sides have already agreed to eliminate tariffs on 90 per cent of all tradable goods. What is currently under discussion is an upping of this figure, with India asking the EU to abolish tariffs on 95 per cent of goods, while EU wants India to offer a tariff slash on 98 per cent of goods.
“We are getting close to a compromise,” said a source on the European side on condition of anonymity. A key EU demand is for the Indians to remove cars, wines and spirits and dairy products from their negative list. While India is reportedly amenable to the request on dairy, a middle ground on cars and alcohol is being worked out.
One crucial Indian demand is on the services chapter of the negotiations, to do with the facilitation of visas for Indians with job offers in the EU. Brussels has been prevaricating, claiming that visas are a member-state, rather than EU competence. However, there are a couple of immigration-related directives being pushed for by the European Commission independently of the FTA that might address some of the Indian requirements.
One has to do with a proposal for a blue card, the European equivalent of the American green card. If adopted, it would grant a blue card holder the same access to pensions, housing and healthcare as an EU citizen. The blue card would also open up the possibility of job mobility within the EU member-states. It would further entitle its holder to family reunification within six months — and spouses would be permitted to look for employment within the EU as well.
Another proposal is related to intra-corporate transferees, aimed at making it easier for non-European employees of multinational companies to be temporarily transferred to that MNC’s subsidiaries in EU member-states.
While these directives, if approved, do not apply exclusively to India and are therefore not directly part of the FTA negotiations, their fate within the EU system will impact on what the European side is able to promise in the services negotiation.
Similarly, India might be disposed to compromise on the EU’s demand for greater opening of the retail sector, given that New Delhi is already considering a more general move in that direction.
The key sticking points that remain unresolved, however, are in other sections of the FTA. Intellectual property rights is one of these. The EU is pushing India for Trips-plus provisions. But several civil society groups, including European ones like Medicins Sans Frontieres, have contended that by demanding India impose greater IPR (intellectual property rights) protection on medicines, the EU-India FTA could put at risk the lives of needy patients in developing countries.
The European Commission has been insisting that the chapter on IPR will in no way “limit India’s capacity to produce and export life-saving medicines”. The commission’s trade spokesperson also told Business Standard that “the enforcement part of the IPR chapter will make clear that it should not interfere with the trade of generic medicines in transit”.
The latter assurance gains importance, given that since 2008, several consignments of Indian generics have been seized by customs authorities while in transit at European ports.
But despite public EU statements to the effect that India and Europe have already agreed that the FTA will move beyond Trips, sources on the Indian side said no such agreement had been reached.
The chapter on sustainable development, which seeks to bind India to a range of human rights and environmental commitments, is another point of contention. New Delhi claims there is no room in a trade agreement for such provisions.
Despite the hurdles, the mood in Brussels is upbeat. For the EU, the FTA with India is an important test of its new external policy aimed at deepening relations with strategic partners, of which India is one. If successfully concluded, the India FTA would be the EU’s first with a major emerging economy. Indian industry body Ficci estimates that bilateral trade could touch $572 billion ( Rs 26 lakh crore) by 2015 if the deal goes through.
