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US favours Nafta-type investment pact with India

Economic Times, India

US favours Nafta-type investment pact with India

28 April 2008

By Deepshikha Sikarwar, TNN

NEW DELHI: The US wants to include labour and environment standards in the proposed bilateral investment agreement with India. While India wants to structure the pact on the lines of similar agreements that it has with other nations, the US wants to structure it on the lines of the investment chapter in the North American Free Trade Agreement (Nafta).

New Delhi is reluctant to consider the US suggestion and both sides are expected to hold discussions next month to thrash out the structure of the agreement. India has already conveyed its reservations to the US. It has said the standard format for bilateral investment promotion agreements (BIPAs) should not be given up in favour of the US-Nafta model.

Government sources told ET that India is opposed to labour or environment standards being a part of trade or investment agreements. It had opposed EU’s moves to bring these issues into multilateral trading system and would not allow such issues to creep into such bilateral agreements. India has BIPAs with most of its key trading partners, including Australia, the UK, France, Germany and Russia.

Sources said bringing such issues into investment pacts would be very ambitious. Besides, the US model also provides for pre-investment national treatment or most favoured nation treatment (MFN) for its investors, which
India would find difficult to commit. New Delhi has suggested that the agreement structure should not be so high on ambition that it becomes difficult to conclude.

After the first round of exploratory talks in March, Planning Commission deputy chairman Montek Singh Ahluwalia had met US trade representative Susan Schwabe early this month and held discussions on the possible contours of the proposed agreement.