Brussels, 22/07/2013 (Agence Europe) - There is no chance of a free-trade deal between India and the European Union ahead of the Indian general elections next year so both sides are simply trying to protect progress made at technical level since 2007.
A workshop at the European Parliament on 24 September, organised by the international trade committee and its chair Vital Moreira (S&D, Portugal), entitled “The long road to an EU-India free-trade deal,” shed clarity on the matter. The bilateral trade and investment agreement (BITA) that has been under negotiation between the EU and India (the second biggest trading power in Asia) since 2007 will not be signed this year or before the Indian general elections in the spring of 2014.
Meetings in May, first at technical level between the chief negotiators and then at political level between EU Trade Commissioner Karel De Gucht and Indian trade minister Anand Sharma, were unable to iron out the disagreements and recent months have seen no progress. Technical talks have not resumed. The only hope now is a damage-limitation exercise and finding a way to freeze the talks at the current stage to protect what has been gained so far, so that they can resume again in fifteen or eighteen months time, after the Indian elections. De Gucht and Sharma will make a last-ditch attempt in October to seal a deal but are not holding their breath.
There are a number of persistent stumbling blocks.
A major issue is the question of the EU granting India the status of a country that protects personal data, which India is demanding for its burgeoning IT industry. India has reformed its IT laws to introduce data protection, but the system is deemed insufficiently robust by the EU.
The parties have also failed to remedy gaps in other key areas. New Delhi wants an ambitious offer from the EU for temporary working visas for Indian IT professionals (wanting the 20% safeguard quota introduced under the Mode 4 system of the World Trade Organisation's agreement on trade in services to be removed), and the EU is demanding an opening of Indian banking and insurance (removing the 49% limit on foreign investment), but parliamentary approval in India is required for this. The EU also wants India to made concessions for the motor trade, wines and spirits and public tender.
On cars, India refuses to reduce its import duty below 10%, but the EU wants import duty to be phased out.
On wine and spirits, India is reported to have offered to slash back duty to 40% from the current 150%. The EU wants the duty reduced to 30%.
On public services, Brussels wants commitments from India on a new public procurement law, which has not yet been submitted to the Indian parliament. The stakes are huge, because public procurement accounts for 15% to 20% of Indian GDP, due to infrastructure requirements in a range of sectors, like telecoms, energy, railways, roads and healthcare.
The EU needs to reach agreement with India on intellectual property, pharmaceuticals and sustainable development.
Last Tuesday, Europe's chief negotiator Ignacio Bercero and India's ambassador to the EU Dinkar Khullar tried to give a positive assessment, but the chances of a deal look slim or non-existent. Two experts attending the workshop, Paul Wymenga of Dutch institute Ecorys, and Arpita Mukherjee from an Indian research centre, raised questions about the actual benefits for both sides of a deal that would be highly unbalanced in India's favour. The Commission clearly prefers to focus time and energy on negotiating free-trade deals from which it could benefit more, like those with the United States or Japan, rather than get bogged down in lengthy talks with partner reluctant to compromise.
Initially, the EU and India wanted to breathe new life into trade of almost €80 billion in goods in 2012 (€38.4 billion in exports for the EU and €37.2 billion for India) and €20.4 billion in services in 2011. Bilateral investment exceeded €40 billion in 2010 (€35 billion of it from the EU).
The breakdown in the trade talks has led to a cooling in EU-India relations because the usual annual summit has not been held since February 2012 and it is hard to imagine one being organised before the Indian general elections. (EH/transl.fl)