India, EU pact won’t be ready before Dec summit

LiveMint | 26 November 2010

India, EU pact won’t be ready before Dec summit

Agreement delayed because of economic crisis in Europe and unresolved issues between the two sides

Asit Ranjan Mishra

Negotiations for a free trade agreement (FTA) between India and the European Union (EU), which began in 2007, cannot be concluded by 10 December, when a summit between the two sides is scheduled to start.

They had earlier said the deal would be done by December 2010.

“Signing of the agreement or even conclusion of negotiations before the India-EU summit is out of question now,” a commerce ministry official said on condition of anonymity.

Prime Minister Manmohan Singh is expected to leave for Brussels for the summit on 8 December. However, the official said a report will be presented at the summit on what has been achieved so far under the negotiations and the timetable by which the deal will be closed. The summit, which was earlier scheduled for October, had been postponed to December.

“We expect the deal to be closed latest by April,” he said.

The delay was ascribed to the economic crisis in Europe and unresolved issues between the two sides such as services.

“We lost a couple of months in the summer as Greece and Ireland were going through an economic crisis. Then, elections and the political mandate in some countries also dampened the ability of EU to make credible commitments,” he added.

India is, however, yet to firm up its position on many crucial issues, said Arpita Mukherjee, a professor at the Indian Council for Research on International Economic Relations.

“Negotiations have really not taken speed on crucial issues like government procurement, intellectual property rights, labour standard and sustainable development,” she said. “We have not dealt with these issues in any of the earlier FTAs. We are basically developing our position while EU already has a position.”

“No domestic consultation has started on many of these issues. It will be time-consuming,” Mukherjee said. India must look at the EU-South Korea FTA which is the most comprehensive agreement EU has signed, she said.

The agreement is set to be India’s most ambitious bilateral trade agreement as the EU is already its largest trading partner. While annual bilateral trade between the two sides totals around €77 billion (Rs.4.68 trillion), India ranks ninth on the EU’s list of major trading partners.

India has demanded asymmetric tariff reduction in goods given the different level of development between the two. The EU wants tariff liberalization of customs duties on a large number of agricultural products to which India is firmly opposed, given the sensitivity of the issue at home.

Earlier this year, EU trade commissioner Karel De Gucht had said that demand for greater market access by European companies, public procurement and services are the issues pending resolution.

The agreement is being opposed by non-governmental organizations over concerns that the proposed Trade-Related Aspects of Intellectual Property Rights-plus provision in the deal will impact India’s ability to produce and export life-saving generic drugs to developing and least developed countries.

The commerce ministry official also said that a compromise is being worked out on the drug seizure issue. India and Brazil took the EU to the World Trade Organization over the seizure of generic drugs in transit at European ports.

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source: LiveMint