FTA talks: India accuses EU of adopting delaying tactics

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New Delhi | Published: May 3, 2016 5:44:59 AM

Amid reports that India has developed cold feet on the India-EU Free Trade Agreement (FTA), the government has accused the European Union (EU) of adopting delaying tactics and not showing any interests in taking the talks further.

Amid reports that India has developed cold feet on the India-EU Free Trade Agreement (FTA), the government has accused the European Union (EU) of adopting delaying tactics and not showing any interests in taking the talks further.

At the 13th Indo-EU Summit held in Brussels late last month, Prime Minister Narendra Modi and his Belgian counterpart Charles Michel had pitched for resumption of FTA talks on “mutually agreed terms”.

According to commerce and industry minister Nirmala Sitharaman, “India has written to EU trade negotiators for dates to resume trade talks, but there has been no response yet”. The minister, who chaired a consultation meeting with economists and media observers on ‘FTAs & India: the way forward’ organised by New Delhi-based think tank RIS, said the perception of India being a laggard on global trade negotiations needs to be fought both by the government and other stakeholders.

Dismissing allegations that New Delhi’s “negative and protectionist” attitude was the reason for delays, Sitharaman said the delays were due to the partner nations who are opposing India’s ‘ambitious offers’
in terms of services and investment.

The negotiations are going on for FTAs with EU, Australia and RCEP (Regional Comprehensive Economic Partnership) among 16 nations from Asia-Pacific, also comprising India. Having expertise in the trade of services, India has been proposing for elimination of restrictions on temporary movement of skilled workers in all these FTAs on a mutual basis. According to the minister, countries like Australia, and EU, want removal of tariffs from India on even sensitive products like agriculture and industrial sectors with regard to the proposed FTAs. However, Sitharaman said India will not succumb to such pressure.

EU has been pushing India to agree to lower duties on automobiles as a pre-condition for resuming FTA negotiations. However, according to senior officials in the ministry, India has the right to protect its domestic auto industry.

Sources added that the perception that India is indulging in delaying tactics has been compounded by recent comments made by the NITI Aayog, which insisted that India enter into a free trade pact with EU even if the country has to compromise, or else the benefits from rising wages in China will go to nations like Bangladesh and Vietnam.

NITI Aayog CEO Amitabh Kant had last week said it was “better to compromise on wine and cheese and on large vehicles to push for our apparel exports with Europe” so that India could penetrate these global markets because “this is one sector which will enable us to create large-scale jobs”.

During Sitharaman’s recent visit to Brussels for the talks on FTA, her counterpart expressed regrets for not making it to the meeting. But the minister met other officials of EU. According to officials, on her return to India, the commerce ministry wrote to EU for setting up dates for taking talks forward.

According to officials, the negotiations on the proposed India-EU FTA have been delayed due to the uncertainty over ‘Brexit’, a possibility of Britain leaving EU.

Talks for FTA, officially known as the Broad-based Trade and Investment Agreement (BTIA), have been stalled since May 2013, as both sides are yet to bridge substantial gaps on crucial issues , including data security for the IT sector. On the EU side, there are concerns surrounding industries like auto components, wines and spirits, while on the Indian side, there are issues related to visas for professionals, especially those from the IT sector.

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