India can reverse mkt access to EFTA if FDI commitments not met: Artieda

$100 billion FDI is a massive number. It took my breath away, said Swiss State Secretary for Economic Affairs Helene Budliger Artieda

India and the European Free Trade Association (EFTA) member states (Iceland, Liechtenstein, Norway, and Switzerland) were able to clinch the long-pending trade deal days before the election code of conduct kicks in. In an interview with Asit Ranjan Mishra, Swiss State Secretary for Economic Affairs Helene Budliger Artieda — who led the negotiations from the EFTA side — says both sides respected each other’s sensitivities to conclude the trade deal. Edited excerpts:

Is there a sense of relief and achievement that the deal could be signed just before the election season in India?

We were really racing against the clock. We are massively relieved that we just got it before the elections. We really gave it our all. On all sides, we felt that there is not much missing and it would have been a pity if we couldn’t finish before the Indian elections.

How much time will it take to ratify the deal by EFTA countries?

It is difficult to say. In Switzerland, it will go to Parliament. We have been actually very successful in recent years. We want to do it as fast as possible. But we have Moldova, which still needs to be ratified, and we just modernised (a trade deal) with Chile. So, we have a sort of a backlog. But hopefully, by the end of this year, it will be in Parliament.

The most talked about part in the deal is the FDI commitment. Is it a binding commitment or is it the best endeavour basis?

No, there is a mechanism in it, which makes it tangible. It is not legally binding because it is the Swiss private sector that will have to do the investment. In Switzerland, we are truly a bottom up country. So, I can’t force a company to come and invest in India. But it’s also not just a memorandum of understanding (MoU) because we linked it to market access. The great difficulty is when you do a free trade agreement with a giant of 1.4 billion people (like India) and us, the EFTA countries with 15 million. How do you make it a balanced deal? That’s why we have linked this pledge for investment and jobs to market access on goods.

Have you had extensive discussions with your private sector? Have they agreed to that kind of commitment?

Yes, of course. $100 billion foreign direct investment (FDI) is a massive number. It took my breath away. In India, of course everything is big, much less so in Switzerland. I consulted with business leaders, business associations and different sectors — and I felt that everybody is so excited about the India of today and the India of tomorrow. So, I got broad support. Otherwise, I wouldn’t have dared also to do the linkage with the offer on goods.

Which sectors are you most keen to invest in India?

That’s difficult to say because we (Switzerland) are actually quite diverse in our investment relationship with India. We also didn’t pledge according to sectors because in 15 years many things can happen. If you would have asked me about green hydrogen 15 years ago, I would not have considered talking about it. But nowadays, it is a massive thing. On access to the market for goods, we are most excited about the machinery industry, for precision tools and textile machinery. But it’s not a threat to Indian companies because Switzerland doesn’t compete on price and we don’t compete on mass. We bring highly innovative, top quality to India. It will actually allow Indian industries to capture world markets and become manufacturing and services hubs for the rest of the world. 

But the deal not only has an investment commitment but jobs commitment of 1 million also...

Right, that was very important for minister (Piyush) Goyal. That’s of course how we usually do it. In Switzerland, there are only 9 million people. We are actually faced with the challenge that baby boomers will leave the labour market soon. So, I am not in the business of exporting Swiss people to India. With investment (from EFTA countries), Indian people will be hired.

And, if these investment targets are not met…

Yes, then India could unilaterally revoke partially or temporarily some of the tariff access that we have got on goods. But it’s a whole process. We have a monitoring mechanism that we have to now put in place. There will be a sub-committee that will do the monitoring. If in 15 years, for any reason, we don’t match the pledge, then we have to look at why. There could be a security crisis on your side of the world or our side of the world. Hopefully, there won’t be a pandemic. So, there is a mechanism that could potentially recalibrate if force majeure should fall upon us, but we really don’t hope.

But that review will take place at the end of 15 years?

No, we have decided that it’s good to know already how we are doing after 10 years just to stop and see are we doing well and do we need to do more? The more difficult discussion starts at 15 years, and then, there will be a whole mechanism at the sub-committee and committee levels. And then, it will be a political-level discussion on why we have not achieved or may be over achieved, you don’t know. Do we have to read just the objectives? There is a grace period of five years for these discussions to happen.

So, reversal of duty cuts, if any, can only be done after 15 years?

No. Fifteen years and then discussions of five years. And then, India could start acting (after 20 years).

Is there a commitment of the number of professional visas to be issued annually under Mode 4 services agreement?

Migration in Switzerland is a sensitive area. In Switzerland, the cantons (states) actually have the competence to regulate migration. So, I can’t go into migration quotas in great detail at the national level.  

Are you disappointed that there is no duty cut on gold? 

No, not at all. We have been successful in this negotiation because we respected each other’s sensitivities from the get go.

You have to understand, the gold is not from Switzerland. It is the refineries, which are in Switzerland. Although we appreciate that, if you look at their contribution to our GDP, it is not much.

Is there any TRIPS plus commitment in the trade deal?

There is no TRIPS plus text. The text circulated in Indian media is not the text that you will find in the chapter.

And are you happy with that?

I have to say no. I would have hoped for a more ambitious text. Don’t get me wrong. For Switzerland, it is a bread and butter issue. We are not a large country in size and not commodity rich. Our wealth appears in our brain. Of course, we will always advocate for a strong IPR protection.