With the Doha Round unfortunately stuck, attention will shift globally even more to various bilateral and regional agreements. India is no exception to this trend and one of the important FTAs being negotiated is with EC, consisting of 25 member states, a mini-multilateral in various aspects. Evidence clearly suggests that the biggest potential gain for India from such a comprehensive agreement would likely be in the area of services.
Realising this, India has been pushing for parallel negotiations on goods and services. However, certain pre-conditions have to be met for India to realistically gain in services from these negotiations. These pre-conditions are particularly relevant owing to the character of the EU-one entity, seemingly for 25 different member states, implying a single schedule of commitments for EC and a ?single? set of regulations.
However, the reality is vastly different. While EU has one services schedule in the WTO or in its FTAs, in fact, there is an amazing range of differing levels of commitments for these 25 member states. In effect, therefore, this is akin to multiple schedules.
Let me illustrate with some examples from ECs revised offer in WTO. In accounting services, in Mode 1, it is ?unbound? for France, Hungary and Italy, while it is ?none? for other key members and Austria has restrictions on national treatment. In Mode 4, EC has horizontal commitments for four categories but within this, Cyprus has no commitments on any of them. The new members like Hungary and Poland have promised commitments from 2011.
So, the biggest challenge and opportunity for India is to ensure harmonisation of services commitments across the member states? spectrum. This would provide an integrated access to the EU market, without which a TIA (Trade and Investment Agreement) with EU, as opposed to individual member states, is less meaningful. This would be critical for services sectors/sub-sectors of commercial importance to India.
This is not as difficult and demanding as it may first look. Simply stated, it would require binding of similar level of commitment for particular sectors and modes in all the relevant member states. This could be possible in many areas since there may be no actual ground restrictions in particular member states. Where there are real policy restrictions in particular member states, which necessitate separate levels of commitments and concomitantly are barriers to free trade for India, would ?real? negotiations be involved. This is particularly true in the area of cross-border supply of services where large sub-sector/sectors in particular member states remain ?unbound? without probably corresponding ?real? restrictions. This is likely to be one of the most promising arenas for India.
The other area of interest is Mode 4. Market access demands by India have already been well articulated in WTO and bilaterally, real market access will not be achievable unless the issue of recognition of qualifications is suitably addressed. The conventional wisdom of negotiating MRAs, especially for all professional services, is unlikely to resolve the issue. The experience with Singapore, a much simpler exercise as compared to EU, has been poor and not a single MRA is even close to being clinched. Imagine negotiating MRAs with each of the 25 member states with individual professional associations in each?a statistical nightmare and an impractical deliverable. In fact, this would be offered by the EC as they are giving up nothing while seemingly addressing one of India?s main concerns.
?To be concluded
The author is CEO, West Bengal Industrial Infrastructure Development Corporation