The Hindu Business Line : Pact with EU could go beyond FTA

The Trade and Investment Agreement (TIA) that India and the European Union have agreed to negotiate on is likely to go beyond a Free Trade Agreement and take into account various issues such as non-tariff barriers, export of services and movement of professionals between the two trading partners.

Currently, the EU is India's largest trading partner with bilateral trade valued at $20 billion. But India contributes just 1.5 per cent of total EU trade and is the 10th largest partner for EU.

List of recommendations

Recognising the potential for increasing bilateral trade and economic exchanges, the High-Level Trade Group set by India and the EU last year has now made a comprehensive list of recommendations on trade in goods and services, investments and on technical and sanitary and phytosanitary barriers to trade, intellectual property rights and competition policy.

It has also been decided that the proposed TIA would cover over 90 per cent of the tariff lines of foreign trade.

Explaining the significance of the proposed TIA, a senior official told Business Line that despite trade liberalisation and lifting of quotas, Indian exports have repeatedly got struck down in the EU, mostly on account of non-tariff barriers.

"Normally, these issues could have been sorted out at the World Trade Organisation forum, but there is realisation that progress at the WTO has become very difficult given the different positions being held by the US, the EU and the developing countries.

This has probably prompted the EU to relent from its earlier stand of going in for only multilateral negotiations to bilateral ones now," the official said.

Tariff reductions

About the proposed tariff reductions, the official said India was already committed to reducing import tariffs and was also proposing FTAs with Asean and other countries.

"Already a significant part of Indian imports are on the zero-duty track and an agreement with the EU would only provide a road map for concessional imports in a phased manner," he added.

CII suggestion

According to the Confederation of Indian Industry, the two biggest areas that would need deeper negotiations would be mutual recognition agreements for Indian services in the EU and for technical standards for goods.

This would be important for higher access to the services market there through movement of professionals. Also, considerable work would have to be done to identify specific NTBs that impact the flow of goods and services, the CII said, and added that it would build a comprehensive list of such barriers that impact Indian goods and services trade.

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