T S Vishwanath: A little BTIA give and take

Political will from both EU and India could wrap up negotiations for a bilateral trade and investment agreement before the next polls

Members of the International Trade Committee of the European Parliament were in New Delhi recently to assess the status of the negotiations for a bilateral trade and investment agreement (BTIA).

The visit was motivated by the fact that the European Parliament plays an important role in framing the trade policy of the European Union (EU), and the Members of European Parliament (MEPs) wanted an update on why the progress between the two sides has been slow. The MEPs met with different stakeholders including members of Parliament in India. The European members were keen to understand the importance of the agreement for India.

Following the consultations they were of the view that except for some critical areas of interest for both sides, the majority of negotiations were already wrapped up, and with a bit of political will on both sides the agreement could be signed soon. However, it is important to note that with elections on the horizon, India is unlikely to accept some of the demands of the EU, including an agreement on public procurement and opening up of financial services to the extent the Europeans have demanded. It was clear the Europeans were keen on fast-tracking the process, though they realised that for both the sides some critical areas still remained unresolved.

The EU has been in the process of negotiating agreements with a majority of its partners. For instance, it has recently signed an agreement with Canada after four years of negotiations. According to reports, Brussels views the agreement with Canada as a forerunner to the agreement it is negotiating with the US. The Canada-EU agreement will remove tariffs from 99 per cent of products and it will provide a liberal regime for services in sectors such as telecommunications and financial services including banking.

The real gains for the EU, according to reports, come from the last minute agreement by Canada with regard to beef and dairy that allows for a 50,000-tonne increase in the EU's quota for beef imports. Canada has also signed off on doubling its quota for dairy imports to an additional 17,700 tonnes.

According to a report by the Geneva-based Bridges, the deal is also slated to open up public procurement markets at all Canadian levels of government, both sub-federal and federal. Interestingly, the EU is also keen in opening up both federal and sub-federal public procurement markets in India under the BTIA. In the EU-Canada agreement, geographical indications - products that are specific to a region such as champagne - will also be protected for various EU products ranging from wine to cheese to other products, an issue that also finds place in the India-EU negotiations.

Brussels is also involved in negotiations with another important partner - Japan. The two sides have already held three rounds of negotiations, and if things go according to plan then an agreement is expected to be in place by next year. As with India, with Japan, too, the EU is having problems in the area of liberalising the market for automobiles. Japanese automakers have also not been very keen to open up the market to the EU. However, the EU is not just targeting tariffs in Japan for auto but also non-tariff barriers.

The EU, as is evident, is keen on completing all its current negotiations by next year, as the current commission will end its term at the end of 2014. However, with India, the roadblock is primarily because first, India goes to polls by the middle of next year and by the time a new government comes into place with the mandate to negotiate the current Commission at Brussels would be on its way out.

Therefore, it is important for the two sides to look at taking forward the progress achieved so far to try and reach an agreement at the earliest. However, for India the two un-resolved issues of being declared a data secure nation and a good offer on movement of professionals would be important to achieve before moving forward on the agreement.

The writer is Principal Adviser at APJ-SLG Law Offices