EU may cut import duties on more items in CEPA

Move will allow Indian exporters greater access to EU.

The European Union may cut import duties on more items as compared to India in the proposed Comprehensive Economic Partnership Agreement (CEPA), which is being currently negotiated by both the sides. The pact covers free trade of goods, services and investment between the two blocs.

The duty cut move will allow Indian exporters greater access to the EU market. India has asked for protecting 10 per cent of the nearly 5,000 goods that are being traded between the two sides by bringing them under the “sensitive list” which will see lesser or no duty cuts. At the same time, it has asked EU to do the same for half the amount of items.

Government officials said the EU was “willing” to consider India’s demand for more protection. Both the sides have exchanged the possible list of items that could be put in the sensitive list, where duties will not be completely slashed

EU already has one-fourth of its total goods traded at zero duty. Thus the economic bloc will have to bring down duties in the rest of the goods. At the same time, India will have to bring down duties in a greater number of items. “Due to this inherent asymmetry in trade (where EU has large number of items already in zero duty), we have asked for reconsideration of the sensitive list,” said a senior commerce ministry official.

In a bid to capture the views of the Indian industry, the commerce ministry earlier this month had carried out an extensive exercise in collaboration with the United Nations Conference for Trade and Development (Unctad) to finalise a comprehensive list of items to be identified as sensitive. India’s sensitive list comprises primarily dairy and agri products, chemical, leather and automobile components.

The EU sensitive mostly contains farm products, as well as chemicals and textiles items. The official said complementarities need to be chalked out on agri-products.

The question of agri-commodities may be a political one for EU but for India it remains a largely economic one, the official said. Although the share of agriculture in total Gross Domestic Product (GDP) is only 18 per cent, three-fifths of the population still lives off farms and related activity.

“It is essential to get some additional flexibility in the agreement for effective market access. A longer negative list and bringing down tariff rates slower than normal are two ways to achieve this,” said Biswajit Dhar, director general, Research and Information Centre for Developing Countries (RIS).

He said that some disciplining was needed with regard to the use of non-tariff barriers like food safety and sanitary and phytosanitary measures (SPS) for increasing market access prospects.

Talking about the future of the EU-FTA trade talks, the commerce ministry official said, “The upcoming discussions will indicate the progress.” India wants to expedite the talks on this big-ticket trade deal and is expecting some headway when the next rounds of talks take place next month.

Talks on the treaty started in 2007. Six rounds of negotiations have since been held but the two sides have not been able to arrive at a consensus on the level of trade to be covered under the FTA, which will eventually eliminate duties on goods traded.

According to the Department of Commerce, EU is India’s largest trading partner and total bilateral trade stood at over $70 billion in 2008-09.