Third India-EU Summit May Pave Way For More Indian Agri Exports

Written by Malcolm Subhan | Updated: Sep 16 2002, 05:30am hrs
Will October 10 mark a break through in Indias efforts to develop its exports of milk products, fruit and vegetables and gherkins to the 15-nation European Union (EU)

Prime Minister Atal Behari Vajpayee will be in Copenhagen that day, to meet the Danish Prime Minister for the third India-EU Summit. Of course, no one expects the two prime ministers to concern themselves directly with the ins and outs of market access for Indian gherkins, or gelatine, or new grape varieties, or meat. But they can send a powerful political signals to their trade ministers on how to deal with Indias exports concerns - and those of the EU countries.

India, after all, has been running a hefty surplus in its agricultural trade with the EU. It came to some $900 million last year. And it could be argued that India is not doing so badly, relative to other Asian exporters. Its exports came to $970 million last year, well below the $1,400 million recorded by China and Thailand, but very much in line with the $1 billion recorded by Australia.

India has a considerable surplus in its agricultural trade balance with the EU, the man who overseas the EUs agriculture, Franz Fischler, told a meeting organised by the Confederation of Indian Food Trade and Industry (CIFTI) in New Delhi some 15 months ago. EUs Agricultural Commissioner agreed that there is room for further improvement of Indian agricultural exports to Europe.

But the unused exports opportunities he was referring to arose from the complementary nature of important Indian products, as compared to those produced in the EU. India, in other words, can do more to develop its exports of tea, coffee, cashew nuts and other tropical products, for which it has an obvious comparative advantage over the EU.

The fact that India has such a massive trade surplus is clear evidence that the generalised system of preferences (GSP) scheme operated by the EU is working to the benefit of its exporters.

But India wants to add to its export basket milk and milk products, egg products and meat, as well as fruit and vegetables which will compete with the EUs own production. The country is a producer, after all, of both tropical and temperate zone products. And theres the rub.

Commissioner Fischler had already alerted his CIFTI audience to the problems this raised. Opening markets in developed countries generally for temperate products will not necessarily be of benefit to the export interests of countries like India, he declared, but did not explain why this should be so.

The fact remains that when the joint commission, consisting of Indian and European Commission officials, met here on July 10, it held a long and inconclusive discussion over the market access issues raised by the former. India has been pressing the European Commission, the EUs trade negotiating arm, for over a year (and for three years in one case) to approve its export units for milk and other dairy products, egg products and gelatine.

These issues were discussed in the joint commission, together with Indian requests for export status for fruit and vegetables, tariff reductions on flowers and gherkins, and approval of Indian accreditation agencies for organic products. The EUs sanitary and phyto-sanitary, and other health-related measures, are seen by India as obstacles to the countrys exports.

The threat that Indian consignments of marine products could be destroyed in EU ports on health grounds has only added to the tension.

As the joint commission failed to resolve these issues, a working group will try to do so in October. Indian sources here claim that obtaining the necessary approvals involves a lot of paperwork.

The Indian authorities must provide information on the hygiene standards in force and the legislation governing the food products in question. Exports must conform to EU standards, and Indian certifying bodies must be approved by the EC.

But for both Commissioner Fischler and his colleague David Byne, the Commissioner for health and consumer protection, the EU must make sure that foodstuffs entering the food chain meet strict standards of food safety. The numerous food scares of recent years have made European consumers insist that everything be done to protect their health. EC officials insist, however, that the standards Indian exporters must meet are identical to those any European producer or non-EU exporter must meet.

During his visit to India in April of last year Franz Fischler had indicated that the EU was ready to provide some $7 million to help India focus, among other goals, on capacity-building in sanitary and phyto-sanitary practice and laboratory testing. The joint commission is currently working on the details of a $14 million programme, aimed at helping specific projects for promoting bilateral trade and investment. The Indian and Danish prime ministers should adopt it at their October Summit.

Hopefully, the Summit will also prod trade ministers and their civil servants into moving more quickly on the market access issues raised by India, on the one hand, and the EU on the other. But the political will demonstrated by prime ministers is considerably diluted by the time it reaches the lower ranks of the civil service where, in the EU certainly, lobbyists are more influential than prime ministers.

Even so, progress tends to be slow. Last year, the joint commission authorised studies aimed at promoting trade and investment in four specific sectors, including food processing. The studies were to be carried out jointly by Indian and European trade and industry bodies, and their joint recommendations submitted to the Summit for approval.

The entire process proved halting and slow. No EU-wide bodies could be found to work with the Federation of Indian Chambers of Commerce and Industry (Ficci) and the Confederation of Indian Industries (CII); in the end the European Commission appointed consultants to do the work. Their joint recommendations will now be examined by Indian and European Commission officials, at a meeting here later this month. Their recommendations will be submitted to the Copenhagen summit.

Once approved, the two sides will embark on the hitherto slow business of implementing them.

All of which suggests that it will be some time before India begins exporting the milk which Europeans could add to their cups of Indian tea or coffee, or the grapes they could eat after a satisfying meal of biryani, made from Indian lamb and basmati rice.

( All the figures given here relate to SITC, Rev 3, chapters 0 and 1)

(The author is Brussels-based honarary vice chairman of European Institute of Asian Studies he helped set up. The views expressed here are his own)