EC raises concerns over talks of fresh BIT with India

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The TImes of India | 7 June 2016

EC raises concerns over talks of fresh BIT with India: Nirmala

NEW DELHI: European Commission (EC) has raised concerns over negotiations for a fresh bilateral investment treaty (BIT) with India saying that it may not be possible for individual member nations to sign new agreement, Commerce and Industry Minister Nirmala Sitharaman said today.

However, the minister said that the Union Cabinet has cleared a model treaty and it would stick to that only.

"It is better that the model treaty sooner implemented... sooner we have the new law, which overcomes many of those lacunae, it’s better," she told reporters here.

The issue came up for discussions during the recent bilateral meeting of Sitharaman and her European Union counterpart Cecilia Malmstrom on the sidelines of the Organisation for Economic Cooperation and Development (OECD) ministerial council meeting in Paris.

"They were worried about the investment treaty about which the Finance Ministry has written to all the European countries saying every bilateral investment treaty whichever country has had with India will become null and void and that within a year, they should all sign a new treaty based on the model investment treaty which is being circulated to everybody," she said.

On receiving the letter, individual European countries called the EC and stated that post-2012, within the European Commission, the power to negotiate bilateral treaties particularly on investment has been transfered to the EC by the countries. The EC is now the only body which can negotiate on investment agreements and no longer can individual countries deal with bilateral investment treaties.

"So the individual countries started panicking and saying look India has written to us like this. Now we (European countries) cannot go and negotiate with (India) because of the 2012 regulations.

"So Cecilia has written to me and to the Finance Minister saying look this is happening," she said adding on this background both the leaders met in Paris.

It was Finland, Germany and Latvia who raised the issue.

Sitharaman said, "We are saying that this agreement should be negotiated at the earliest and from the time this model was notified, one year time was given...Let them understand that India’s cabinet has now cleared a model treaty and it would stick to that model treaty only".

She said that the new model treaty was cleared as the list of cases emerging out of the earlier treaty was "shocking".

"I think there are about 83 odd cases as a fall out of different aspects of the earlier treaty. So last one and a half years, we spent on looking at where we did go wrong," she added.

In December last year, the Cabinet had approved the revised model text for the Bilateral Investment Treaty (BIT) with a view to enhancing protection of foreign investors in India as well as Indian investments abroad, but taxation matters will remain out of its ambit