//

Multiple negotiating rounds, EU-India summits and a number of other technical meetings since 2007, have not been able to iron out differences between the 27 nation bloc and India on the India-EU Bilateral Trade and Investment Agreement (BTIA). With only a "narrow political window" of opportunity left, Commerce Minister Anand Sharma's visit to Europe must be followed closely. An EU-India Free Trade Agreement (FTA) would have an impressive scale. India is currently the EU's 9th most important trading partner, whereas the EU is India's largest trading partner. The FTA would set a predictable framework, slashing duties on over 90 percent of bilateral trade. While the EU-India relationship has been branded a strategic partnership, set against its potential, the relationship has under-delivered. // Indian exporters can attain higher standards with technical assistance from the EU. Moreover they are extending programmes that would look to enhance capacity of trade-related regulatory institutions and enforcement systems, to meet international standards and requirements and business needs. An issue that is polarizing public opinion is the suspicion regarding manufacture of generic drugs. The EU had earlier demanded an exclusive chapter on data exclusivity. By gaining rights over data, innovator companies can prevent their competitors from securing marketing licenses for low-cost versions during the tenure of this exclusivity. This would negatively impact India's pharmaceutical sector, which has been called 'the pharmacy of the developing world'. This fear should be dispelled as the EU has withdrawn its data exclusivity clause. Despite this, many protests continue amidst the fear of a hike in the price of life-saving drugs. Both partners need to treat this issue sensitively. Considering the impact of such an agreement, the details of the negotiations have not been made public. The public has to content itself with leaked reports and drafts. This has caused much anxiety in the minds of the people and communication to the larger public needs to be boosted so as to dispel fears and clarify issues which have been addressed. There are other issues that still need to be ironed out. The EU has pushed for hiking FDI in the insurance sector to 49 percent. Recent news reports suggest that the government is finally moving in that direction. Moreover there is reluctance on the part of the EU to negotiate terms on the issue of government procurement. Read more at: http://www.moneycontrol.com/news/economy/eu-india-free-trade-pact-will-power-indias-growth_906962.html?utm_source=ref_article

//

In the proposed free trade agreement with India, the European Union is demanding access to India's government procurement market for contracts above a certain cut-off value. This is a controversial demand since it will give EU companies the right to bid for all government purchase contracts. The negotiations of a bilateral trade and investment agreement (BTIA) between India and the European Union (EU) are revealing escalating aspirations on both sides for an ambitious coverage. As both sides hope to conclude the agreement by the end of this year, the latest information is that the EU is demanding access to Indias government procurement market, a market which India has not committed to open under any of its current free trade agreements (FTAs) or at the World Trade Organisation (WTO). Are Indian manufacturers and service providers ready to compete with their European counterparts in this very lucrative market, which also serves as an effective social and development policy tool? What will Indian companies get in return in the European market and will India gain on balance? And how does this compare with Indias domestic laws regarding government procurement? Government procurement (GP) or public procurement refers to purchases by government department/agencies of goods and supplies, services and construction and public works. In developing countries, the GP market represents roughly 15-30% of the total market and is lucrative for developed country companies. In India, estimates vary

but the United Nations Conference on Trade and Development, India1 (UNCTAD India 2007) estimate puts it at 13.9% of gross domestic product (GDP) in 2007, while more recent estimates show this market is worth about $156 billion, about 12% of GDP.2 A basic estimate shows the Indian market to be worth Rs 8,00,255 crore or $142.9 billion.3 The EU wants access to Indias government procurement market for contracts above a certain cut-off (called the threshold) value. This seems to be a core mandate for the EU negotiators in most of its FTAs. This is not just about transparency in the process but about market access, and therefore, giving EU companies the right to bid for all government purchase contracts. The government cannot, in general, give special treatment to Indian companies and this opening up can technically include all central and state government purchases and that by public sector undertakings (PSUs). India will apparently get reciprocal access, but the literature points towards significant barriers.
// Context of EU-India FTA negotiations: Hungry for Markets and Raw Materials The EUs push for ambitious FTAs is corporate Europes agenda to maintain a competitive edge in the world economy. Key targets are so-called advanced emerging economies such as India. However, the EUs is negotiating 108 such agreements worldwide after the FTA it has signed with 15 Caribbean countrieswith demands that the combined economic power of 27 European countries be treated on an equal basis as India. All of these FTAs will erode any special access India could hope to gain in the EU market through the FTA. Therefore, our domestic economy will be sacrificed for no real gains. The European Commissions 2006 document Global Europe: Competing in a Globalized World outlines the EUs strategy for aggressively opening developing country markets for EU imports of goods and services, while dismantling export restrictions and duties for raw materials from developing countries. The document notes: Measures taken by some of our biggest trading partners to restrict access to their supplies of these inputs (raw materials) are causing some EU industries major problems. Unless justified for security or environmental reasons, restrictions on access to resources should be removed. Major issues of concern in the EU-India FTA: Impact on livelihoods: According to a study commissioned by the European Commission itself, the FTAwould increase EU exports to India by $17-18 billion while Indias export would increase by around $5 billion. The impact of reducing as many as 95% of our import duties down to zero or close to zero percent in seven years will result in import surges especially since EU agriculture imports in particular are heavily subsidized in a wide range of products such as sugar, dairy, tomato paste, poultry, to name a few. Because the EU FTA will do nothing to curb EU subsidiesfarmers and farm workers will be hard hit by our steep reduction of import duties to the EU. Moreover, a rapid reduction of import duties, combined with ease of entry of European agro-processing and retail firms through the services and investment chapter of the FTA will dramatically impact how food is produced and sold in this country. Indian farmers and workers will not be able to bargain against the power of Europes multinational retail firms.

The ability of Indians to develop value-added agriculture products and other agriculture related services and industries in the future will also be severely undermined because the EU wants to export value-added agriculture products and will dominate in this area. Signing the FTA will severely undermine the growth of rural industries related to agriculture and further worsen rural migration and joblessness. Liberalisation of

distribution services such as those linked up and down the food distribution chain will threaten the livelihoods of small retailers and street vendors in urban areas as well. Though official estimates state that there are over 12 million small retail outlets in India, this number is grossly underestimated as large informal networks exist around retail, often composed of the poorest of the poor. Similarly, Indias formal manufacturing sector has suffered from job loss and jobless growth in the past two decadesthe flooding of EU manufactured goods and capital-intensive manufacturing firms, at a time when Indias manufacturing sector needs to create more and decent work, not less jobs, will further devastate livelihoods. Ninety-two percent of Indias 457 million strong workforce is in the informal sector with no job security and little income. It is this sector that will be the hardest hit from an EU-India FTA whose objectives are incongruent with development objectives and Indias 11th year plan. The Indian Government estimates that it needs to create 200 million jobs by 2020 to deal with current unemployment rates and absorb new workforce entrantsparticularly to help workers get out of low or unskilled work and low wages. With the EU-India FTAthreatening even more jobs, the livelihood situation is likely to become even grimmer in the coming years. EU firms hungry for our minerals and other resources: India is the third largest producer of metallic minerals including chromite and other rare earth minerals and currently restricts exports of iron ore, non iron metal scraps and hides and skins (raw leather). European industries are hungry for metallic minerals. The FTA will be one of the key avenues for obtaining access to these natural resources both through targeting our export restrictions and through the investment provisions of the FTA. On-going land and livelihood struggles related to mineral extraction are thus likely to be increased if mining concessions to European companies are eased through the investment chapter or these raw materials are exported to the European Market. Trading Away Livelihoods for unclear gains: Our import duties are higher in comparison to the EU. Up to a third of our exports receive duty free access to the EU. The biggest stumbling block to our exports to the EU are not their level of import duties, but rather their levels of food, health, environment, labeling, packaging and other standards that block our exports on various grounds. Yet, the FTA will force us to cut our import duties, jeopardizing local production, without really affecting their standards in any meaningful way to allow for our exports. Indias average import duties are 32% for agriculture and 10% for industrial and fisheries imports. In contrast, the EUs simple average import duties were 16% for agriculture and a mere 4% for industrial imports.

Import duties are the easiest way of collecting taxes for the government since goods cannot enter without the necessary duty. However, the EU India FTA along with the others that the government is negotiating will create a major loss of import duty income for the government and affect our national budget. This in turn is likely to have serious impacts on Government spending in social sectors like education and health. The government is also likely to compensate for this loss by raising domestic taxes. Expansive liberalization in services and investment: Europes multinational companies dominate global services trade and investment. The FTAs services and investment provisions would ensure their ease of entry with severe implications for Indias existing and future small and homegrown industries and businesses related to agriculture, manufacturing and services. The EU pushes for a broad definition of investment that can include every kind of asset such as movable and immovable property, stocks, intellectual property rights and concessions to search for minerals. Such a broad definition of investment could commodify and thus put to risk virtually every kind of national asset. Moreover, with a change in European governance due to the Lisbon treaty, the European Commission may have greater powers to negotiate investment. This may mean that an investor to state clause, whereby a European company has the right to sue the Indian government in case of loss of predicted profits, may be part of the FTAnegotiations. The EUs services and investment liberalization formula is WTO plus and as stated above virtually affects all public services and national, state and local laws that are seen as barriers to free trade.

The liberal entry of European banks may also further constrict the access of banking services in the country: geographically, socially and functionally. The urban-centric European banks largely serve the

niche market segments consisting of high-net-worth individuals and large corporations in India. Time and again, European and other foreign banks have demanded removal of priority sector lending requirements and other riders related to social and development banking in India. This will lead to further exclusion of the poor and rural areas from affordable credit TRIPS-plus intellectual property protection: The EUs demands for TRIPS-plus intellectual property rights would lead to legislative and policy changes in India with regard to the scope of intellectual property protection and enforcement. For instance, the EU is likely to demand that India accede to the International Convention for the Protection Of New Varieties Of Plants (UPOV 1991) or at least comply with a system of plant variety protection that favours plant breeders rights over farmers rights to seeds. India would then have to change its Protection of Plant Varieties and Farmers Rights Act 2001. Such changes would have an adverse impact not only on the cost of commercial seeds but also on biodiversity. The EUs demand for data exclusivity and increased demands for enforcement of intellectual property rights would also limit Indias ability to provide access to affordable medicines. In India, prices of medicines are the leading cause of rural indebtedness. An estimated 70% of out of pocket spending on healthcare is on the prices of medicines alone. Any adverse changes in the availability and affordability of medicines would be catastrophic for the majority of Indians. EU demands would further limit the ability of the Government to issue compulsory licenses on medicines. EUs TRIPS plus demands in copyright protection will reduce access to knowledge. Liberalising government procurement: The EU is also insisting that government procurement which accounts for nearly 13% of Indias GDP be opened up to EU companies. Government procurement helps revive under-developed economic regions, boosts domestic production and thus helps fight against economic recession in the country. Government contracts can also help support Small and Medium Enterprises, marginalized constituencies and poorer states by channeling money through local firms for goods and services. Opening this sector to powerful European companies takes away these necessary tools for dealing with economic recession and fostering development of marginalized constituencies and regions. Creating advantages for EU MNCs through effective competition: Competition law and policy is also part of the negotiations with the EU. While competition policy has the potential to contribute to a countrys development, the model proposed by developed countries would have the opposite result. The EU is reportedly demanding that Indias competition policy should provide effective opportunity for competition in the local market thus helping big EU -based multinational corporations. The EU may further attempt to harmonise Indias competition law with EU competition law thus reducing the flexibility required for India to design a competition law and policy suitable for its economic development. Undemocratic and Unaccountable Process of Negotiating FTAS: The government has yet to articulate its medium to long term strategy behind negotiating FTAs, let alone share any concrete details about the content of each FTA negotiation. The ASEAN FTA was signed without even Chief Ministers of different states seeing the offer of goods to ten ASEAN countries. The Korea India FTA is over 1200 pages long and was signed in complete secrecy by the government in August 2009. Many of the subjects that the GOI is negotiating are state and concurrent subjects in the constitution, yet consultations with states and the parliament has been neglected. Both the GOI and the European Commission have consistently refused to share information with civil society groups and the general public. Repeated calls for transparency and accountability have been ignored undermining the basic tenets of democratic process, policy making and law. The government has failed to even share its studies regarding the FTAs it is negotiating.

Livelihoods, food security, access to healthcare and financial stability threatened by EU-India FTA In addition to creating macro-economic vulnerability, Indias FTA strategy could have major food security, healthcare and livelihood implications that must be assessed in detail. Current free trade and investment policies are proving to be highly costly to citizens worldwide as governments negotiate away their right to regulate and as public funds are used to bailout corporate crimes. It is of grave concern that the GOI has had no public debate on its FTA strategy and that the EU-India FTA and other negotiations till date have been marked by a gross absence of transparency and public debate.

India-EU Broad Based Trade and Investment Agreement negotiations On 28th June 2007, India and the EU began negotiations on a broad-based Bilateral Trade and Investment Agreement (BTIA) in Brussels, Belgium. 2. These negotiations are pursuant to the commitment made by political leaders at the India-EU Summit held in Helsinki on 13 October 2006 to move towards negotiations for a broad-based trade and investment agreement. India and the EU expect to promote bilateral trade by removing barriers to trade in goods and services and investment across all sectors of the economy. Both parties believe that a comprehensive and ambitious agreement that is consistent with WTO rules and principles would open new markets and would expand opportunities for Indian and EU businesses. 3. The negotiations cover Trade in Goods, Trade in Services, Investment, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Rules of Origin, Trade Facilitation and Customs Cooperation, Competition, Trade Defence mechanism, Government Procurement, Dispute Settlement, IPR & GIs. So far, 13 rounds of negotiations have been held alternately at Brussels and New Delhi. The 13th round was held in Delhi during 31st March to 6th April, 2011. India-European Free Trade Association (EFTA) Negotiations on broad-based Bilateral Trade and Investment Agreement The European Free Trade Association (EFTA) comprises Switzerland, Iceland, Norway & Liechtenstein. These countries are not part of the European Union (EU). Recognizing the need for enhancing bilateral trade, a Joint Study Group between India and EFTA was established and mandated to take a comprehensive view of bilateral economic linkages between India and EFTA, covering among other, trade in goods and services, investment flows, and other areas of economic cooperation, and to examine the feasibility of a bilateral broad based trade and investment agreement. 2. Based on the conclusions of JSG, negotiations commenced in October 2008 for the India-EFTA broad based Trade and Investment Agreement (BTIA). The negotiations cover Trade in Goods, Trade in Services, Investment, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Rules of Origin, Trade Facilitation and Customs Cooperation, Competition, Trade Defence, Dispute Settlement and IPR. 3. 8 rounds of negotiations have been held so far, in addition to the meeting of Chief Negotiators (CNs) held on May 30-31, 2011. The 8th round of negotiations was held during June 14-17, 2011.

EU-India
The European Union and India launched negotiations on a bilateral free trade and investment agreement in June 2007. However, between the governments, a number of controversies have been plaguing the talks. Delhi wants Brussels to relax its stringent food safety criteria which penalise Indian farm and fishery exports and to make it easier for Indian professionals to work in the EU. Europe is primarily out to win major openings of Indias services sector and broad liberalisation of foreign investment, while India does not want to discuss allowing European firms to compete in

Indias government procurement market. Indian social movements, including fisherfolk and labour unions, people living with HIV/AIDS and other health activists have been mobilizing against the FTA. International actions and campaigns have particularly targeted the proposed intellectual property provisions of the agreement, and the impact of the FTA on access to medicines.