Meeting of the European Council on Foreign Affairs on Sunday in Brussels, amid growing uncertainty regarding conclusion of negotiations.
The much-awaited free trade agreement (FTA) between India and the European Union (EU) is high on the agenda of the meeting of the European Council on Foreign Affairs on Sunday in Brussels, amid growing uncertainty regarding the conclusion of the talks.
These have got stalled over deep differences over tariff concessions and market access. Both sides recently had yet another round of talks, on September 12-14.
While the EU had been urging for greater tariff relaxation on India’s wine and automobiles sector, India is seeking greater movement of its professionals to EU countries. It has also urged the EU to remove some of the non-tariff barriers faced by Indian exporters.
According to the agenda, apart from tariffs on wines and spirits and automobiles, there are wide gaps on intellectual property rights (IPR), specifically issues related to geographical indications, liberalisation of services and government procurement.
The talks were expected to be concluded by the end of this year. However, it seems now that it might be well into 2012 when a deal may see the light of day. As much as 90 per cent of the bilateral trade in goods and services would be covered under the pact.
Talks to initiate the free trade agreement started in June 2007. There had been 13 ministerial-level negotiations, in New Delhi or Brussels. The EU is a leading trade partner for India, with annual bilateral trade about $85 billion. Both sides have set a target of $200 bn by 2013.
The EU side has also raised concern over India’s “political calendar for 2012”, according to a background note circulated by EU officials ahead of the meeting. The EU is worried that elections in India will take attention away from the negotiations. The EU is thus also looking towards the next India-EU Summit, scheduled for early 2012, as the deadline to conclude the negotiations, The summit is scheduled in Delhi but the date has not been confirmed.
The EU had been demanding major tariff cuts specifically on fully-built vehicles, which has irked the Indian auto industry. It would give European car manufactures such as BMW, Mercedes-Benz, Volkswagen, FIAT and Renault considerable access to the Indian market.
The Society of Indian Automobile Manufacturers is staunchly opposed to giving the EU an advantage over all other trading partners in tariff concessions. They have pointed to other bilateral deals, such as with Japan and Korea, where such a provision was never discussed. At present, the import duty on fully built-up cars is 110 per cent.
“We have made it very clear to the EU that India is not desperate to do the deal. We have made our position very clear that we cannot move beyond a point as far as tariff liberalisation is concerned,” said a senior commerce ministry official.
The EU is seeking IP concessions from India that go beyond what is already committed under the World Trade Organization rules. Patients and health activists across the country have protested against the EU demand to grant data exclusivity provisions to drug-makers that would impact the Indian generics drugs industry.