EU-India free trade deal delayed
The Telegraph | 26 Mar 2011
EU-India free trade deal delayed
The prospect of an imminent of India-European Union Free Trade Agreement has suffered a setback according to officials who said they now believe it may not be signed before the end of the year or early 2012.
By Dean Nelson, in New Delhi
Indian and European trade ministers had hoped to sign an ambitious deal by the end of this month, but EU officials said the talks had been blighted by bureaucracy, divergent interests among its member countries and slow progress on key issues like access to India’s legal and financial service sectors and the protection of intellectual property.
Indian officials, led by Commerce minister Anand Sharma, had given the talks process a boost last autumn with a series of meetings amid rising optimism that they might finalise a deal by the first few months of 2011.
The minister believes the deal could see India-EU trade rise from $72bn today to $100bn in five years, but an early agreement is key to meeting the target.
The European Union estimates an ambitious deal to open up key sectors of each others economies could see 30pc increases in bilateral foreign direct investment.
For India there is an urgency to start reaping the benefit as inward FDI has slumped by more than 35pc in the last year amid declining investor confidence. The Indian government is anxious for foreign investment in infrastructure, logistics, and some financial services to underpin domestically-driven growth of 8.5pc.
In December last year Anand Sharma said the talks had gathered momentum and made real progress on intellectual property rights, co-operation in civilian nuclear power, renewable energy, science and technology, aviation, industry and manufacturing.
“At present we have a trade figure of $72bn from the EU countries. We’ve set for ourselves the target to take it to $100bn in the next five years. This is now achievable, particularly after the agreement is reached, hopefully in the first half if not earlier in 2011. This will be the most ambitious agreement signed by the EU.
"A trade deal of this magnitude and ambition will generate sizeable benefits for the GDPs of India and the European countries. We are near the final agreement on the issue of movement of professionals as well as trade and services,” he said.
But according to EU officials, that optimism for an early deal has faded as negotiators have focused on the “grittier issues". These are understood to include data protection for European pharmaceutical firms and the right of Indian rivals to sell generic medicines in third countries, the degree of access to Indian markets for EU financial service companies, and the free movement of professionals. Access to each others agricultural sectors has yet to be agreed, while the movement of professionals has raised immigration concerns.
India is a signatory to the World Trade Organisation’s TRIPS agreement on intellectual property, but EU officials are understood to have pressed it to go further in accepting ‘data exclusivity’ for medicines whose patents have lapsed. Indian medicine manufacturers say it would effectively extend patents and damage public health in poorer countries.
Negotiators will meet again in May to discuss agriculture and food prices, but EU officials are more pessimistic on the prospects of a deal than their Indian counterparts.
“Our sense is that negotiations are on track, but in any negotiations its standard operating procedure to first pick the low-hanging fruit. On the more ticklish issues, India is a developing country of 1.2bn people and the EU is a [a group of] developed countries with their own wishlists. Discussions have been intensified," said a source in India’s Ministry of External Affairs.
EU officials said they do not want to compromise on substance for the sake of rushing into a deal. “We don’t want a rush to conclude in May if the result is things we care about stay in the too difficult tray or left for the next trade agreement. This is the two biggest bureaucracies in the world coming together to negotiate on things which matter. We want to get the substance right because the chance to get it right might not come again for several years,” said one official.
