India, EU to make trade pact offers in February

But different regulations in EU countries may slow the talks

Even as experts doubt the possibility of a "deep free trade agreement" between India and the European Union (EU), both sides are likely to exchange offers on goods and services by the end of the next month.

The EU is India's largest trading partner and accounts for one-fifth of its exports. Trade experts feel an India-EU FTA will be economically beneficial if only the treaty is "deep", going beyond lowering tariffs and includes topics like regulatory frameworks, non-tariff barriers, as well as investment and competition policies.

"We have had three meetings. Offers will be exchanged on goods and services in the next meeting, scheduled by February-end," said Carlos Bermejo Acosta, counsellor, trade and economic affairs at Delhi-based European Union delegation of the European Commission to India, Bhutan and Nepal. Acosta said the content of the pact was more important than "artificial" timelines.

Commerce Minister Kamal Nath recently said the talks for the FTA were one of the easiest and could be wrapped up by the end of 2008.

"We have no problem with an early conclusion of the negotiations. But we can't have artificial timelines, which could result in a shallow FTA," Acosta said.

Acosta said immigration and visa issues could not be included in the negotiations even though India wanted provisions related to the Blue Card visas (similar to green card of the US) to be a part of the talks. "We do not have the mandate to discuss visa issues in the FTA negotiations from the members of the EU," he said.

Fredrik Erixon, director, European Centre for International Political Economy, Brussels, said a "deep" FTA with the EU was difficult because of different rules and regulations in the 27-member countries.

"Moreover, there is no clear mandate among the EU members on services trade. On the investment front, European bilateral investment treaties are insufficient to promote investment," added Erixon.

Though the general perception was that agriculture-related issues would not be a problem in the proposed FTA, experts point at high tariffs in the EU on farm products.

"In 2006, most-favoured nation tariffs in the EU on farm products ranged from zero to 427 per cent. India has interests in milk products, garlic and bananas, but the tariffs are very high. Moreover, both sides have imposed a lot of anti-dumping measures on each other," said Rajesh Chadha, senior fellow, National Centre of Applied Economic Research.