India, EU agree to seal FTA talks by October

But hurdles on market access could delay pact.

Even as the European Union (EU) and India resolve to close the negotiations for a free trade agreement (FTA) by October, significant stumbling blocks in the form of providing greater market access and public procurement could delay the much desired deadline.

The issues were extensively discussed at a closed-door meeting between EU Trade Commissioner Karel De Gucht and Commerce and Industry Minister Anand Sharma here today, as both explored ways to conclude the ambitious FTA during the coming India-EU summit.

“There are some pending problems that holding the talks. We would have to do some more in terms of more market access for the EU and in areas of public procurement,” Gucht told reporters here today after the meeting.

Gucht, who is on a five-day visit to Asia, also said the EU had reiterated the need to include non-trade issues such as child labour, climate change and labour laws into the agreement. “Otherwise, the European parliament will agree to a deal that will remain silent on these topics … Both sides know that these issues cannot be ignored and will be discussed in appropriate language in the agreement. We are not reasoning in terms of sanctions but in terms of process.”

Talks to initiate a broad-based FTA with the 27-nation bloc had begun on June 27 last year, with eight rounds held so far. Since then, several differences have mired the process of negotiations over the EU’s insistence on including social issues such as human rights, labour policies and climate change within the purview of FTA.

Besides discussion on trade and investment, the negotiations would also take up issues concerning services, intellectual property rights, competition policy, government procurement and geographical indications, among others.

Indian industry has also demanded that such non-trade issues be kept outside FTA. “Any attempt to link trade with social issues would prove counter-productive for the pact. While we do not undermine the importance of non-trade issues per se, the point is they have to be addressed in appropriate forums. Linking them with trade flows is not the solution,” Ficci president Rajan Bharti Mittal said during his meeting with the EU Trade Commissioner earlier in the day.