India, EU resolve digital differences in free trade agreement talks

'Substantial differences' remain over sustainable development chapter

India and the European Union (EU) have reached an in-principle agreement on the contentious digital trade chapter, marking a key step toward concluding a free trade agreement, though “substantial differences” remain over trade and sustainable development provisions.

 

“Regarding text-based negotiations, both sides managed to reach an agreement in principle on the Digital Trade chapter and Anti-Fraud clause, pending some technical consultations,” said the European Commission in a statement, following the conclusion of the 12th round of talks in Brussels, held between July 7 and July 11.

 

The objective of the digital trade chapter is to address “unjustified barriers” to trade enabled by electronic means and to ensure an open, secure and trustworthy online environment for businesses and consumers, stated a draft textual proposal by the EU.

 

The chapter covers sensitive areas such as cross-border data flows, personal data protection, and privacy — issues towards which India has a high degree of sensitivity.

 

After the 11th round of talks in May, the bloc had noted “substantial progress” in facilitating digital trade provisions, including e-invoicing, e-authentication, e-contracts, paperless trade, online consumer protection, spam, digital identities, and open government data, while both sides continued working through “unresolved elements”. 

 

Rupa Chanda, director of the trade, investment and innovation division at the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), welcomed the latest progress in India-EU FTA negotiations, calling it a positive step given the significance of digital trade for both sides. “What may have helped is India’s Digital Personal Data Protection Act and the parallel discussions under the Trade and Technology Council to find common ground. Also, the geopolitical developments may have given an impetus for the EU to find partners it can align with,” she added.

 

On February 28, European Commission President Ursula von der Leyen and Prime Minister Narendra Modi jointly announced that both sides aim to conclude the FTA by the end of 2025. Last month, Commerce and Industry Minister Piyush Goyal said negotiations were advancing rapidly and that an agreement could even be reached before the end of the year. 

 

Talks have already concluded on several chapters, including those covering transparency, good regulatory practices, Customs and trade facilitation, intellectual property rights, and mutual administrative assistance.

 

On trade and sustainable development (TSD), including the contentious labour and environmental issues which India considers non-trade issues, the latest EU statement said both sides had constructive discussions, making progress on several provisions and exploring alternatives on others. “Nevertheless, substantial differences remain, including on the binding and enforceable nature of TSD commitments,” it added.

 

Commerce Department Special Secretary L Satya Srinivas said the two sides exchanged offers related to the services sector during the 12th round. “We have exchanged our offers on services and non-services... there were discussions on that. We also discussed key interests in market access related to goods as well,” he told reporters on Tuesday.

 

The 13th round of negotiations is scheduled to take place in New Delhi during the week beginning September 8. The EU noted that intense inter-sessional engagement will continue over the summer across nearly all topics, with additional discussions likely at higher levels. 

Progress report

 

• Market access: Detailed discussions continue on industrial products and agri-food sector
• Technical barriers to trade: Progress but positions on key articles like QCOs remain far apart
• Services and investments: Substantial progress on domestic regulation and financial services
• Dispute settlement: Very good progress on the rules for state-to-state mediation
• Capital movement: Good progress ahead of round on capital movements, payments, and transfers