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Fresh talks on free trade pact with EU to give equal weight to goods, services, investment

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The Hindu | 15 October 2017

Fresh talks on free trade pact with EU to give equal weight to goods, services, investment


India and the European Union (EU) are set to begin talks soon on re-starting stalled negotiations for a free trade pact but New Delhi will not favour pre-conditions, such as prioritising an investment agreement that the 29-member bloc had earlier insisted upon.

“It was very clearly decided at the India-EU Summit earlier this month that it would be a comprehensive agreement. So, there is no question of giving investments preference over goods and services. But all issues related to investment protection would definitely get addressed,” a government official told BusinessLine.

The proposed bilateral free trade pact — officially known as the broad-based trade and investment agreement (BTIA) — launched in 2007, got stalled due to differences over issues such as market openings in India for items like wines and spirits and automobiles and EU’s hesitation in granting India data secure status.

The BTIA, which includes market access for goods, services and investments, is also important for India because of the increased market openings it hopes to get for its service professionals.

However, when the two sides seemed ready to get back to the negotiating table last year, India’s refusal to renew bilateral investment treaties with individual EU countries that lapsed by April 2017 upset the EU, and it did not respond to India’s requests for dates to re-start talks on BTIA.

“The EU was insistent that the issue related to the BITs be sorted out before re-launching the BTIA. But New Delhi has held on to its position that the investment agreement that would be negotiated to protect investments from the EU countries would be part of an over-all BTIA that includes goods and services,” the official said.

New Delhi wants to renegotiate all its past BITs on the basis of a new model BIT drafted by the Finance Ministry that aims to bring down litigation against the government. While it would be negotiating the pacts bilaterally with most countries, in the case of the EU countries, it would be a comprehensive pact for all 29 nations and a part of the proposed BTIA, the official added.

The ice was broken at the India-EU Summit in New Delhi where both sides decided to start talks on relaunching negotiations for a comprehensive BTIA. The dates are yet to be confirmed, but there are indications from the EU that it might by as early as next month, the official said.

Awaiting right time

While the outlook is positive, Jean-Claude Juncker, President of the European Commission, cautioned that the circumstances needed to be right for the talks to resume.

“Once the circumstances are right – and only once they are right – we will resume. Today’s Summit is an important step in the right direction and our chief negotiators will sit down in the coming days to chart a way forward,” he said at a joint press conference with Prime Minister Narendra Modi after the Summit.

The EU is India’s number one trading partner with exports growing from €24.2 billion in 2006 to €37.8 billion in 2016, according to European Commission figures.

 source: The Hindu