Presentation on

Free Trade Agreement with India and EU-28 country

Presented by

Kiran S. Sawant ( International Business) Roll NO. (9)

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. 1. 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.
2. 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 1.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 Defense, 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 FTA
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 programmed 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. 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.

Negotiations of a bilateral trade and investment agreement (BTIA) between India and the European Union (EU) 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 Organization (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. 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.

Major issues of concern in the EU-India FTA: Impact on livelihoods: According to a study commissioned by the European Commission itself, the FTA would 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 surgesespecially 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. 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 entrants. 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.

 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. 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.

 While the allocation is a reduction from the 417 earmarked in the current budget (2006-13), it means farm subsidies will still account for a whopping 50 million, or Rs 356 crore, every year. This has darkened the outlook for Indian farmers who could face new threats to their livelihood once India signs on a free trade agreement (FTA) with EU in coming weeks.

In this FTA, India stands to gain very little because close to 69 percent of its agricultural exports and 65 percent of its non-agricultural export already enter the European markets without duties, whereas it allows only less than six percent of the formers products without duty. Therefore, what the EU is looking for is India lowering its tariffs and allowing easy flow of their products in to the country, which already has a bad trade deficit with all its FTA partners except Singapore and Sri Lanka.
As a Third World Network (TWN) note highlights, Indias additional market gain is very little while it has to significantly open its markets. India is justified of this present asymmetry because of the huge subsidies and other hidden incentives that the EU products enjoy in their countries. Asking for symmetry is unequal because our tariffs are visible while their subsidies and incentives are invisible.

Under the proposed FTA, India has to remove 90 percent of the tariff, but will the EU lift its subsidies that are disadvantageous to Indian agriculture? No, there is no provision to discuss subsidies in the FTA. So, in the short and long run, it will be bad for both farmers and agro-industries in India.

The impending EU-India FTA agreement is one fraught with severe risks. Civil society both in India and the EU are increasingly concerned that the FTA with its current provisions is not the best way forward for development. The impacts on livelihoods will be nothing short of disastrous. Clearly, the agreement will bring gains to European and Indian large business interests. The issues of poverty and unjust economic systems are not central to the negotiations.
The two articles we have summarized are critical and important analyses of the EU-India Free Trade agreement now being engineered. Indian activists are not alone in rejecting the agreement. Important and influential actors in Europe are also in protest mode over the agreement.

A few unfavorable aspects of the proposed agreement include: 1. Extension and enforcement of Intellectual Property Rights through provisions that go beyond what is required under World Trade Organization agreements. 2. Further liberalization and deregulation of financial services. 3. Liberalization of trade in goods. 4. The abolition of protective tariffs that might trigger surges of cheap imports from the EU. 5. An acceleration of the entry of major European retail chains. 6.Further liberalization of investment that would remove important government policy tools that protect and build domestic industries. 7.Undermining the scope to export restrictions. Economic issues are often ignored by the common people partly because they feel they can not influence change or because the media does not adequately expose the faulty nature of economic, pro-liberalization policies.