Differences over insurance, IP rights, labour/ eco commitments

EU wanting more access to India’s insurance sector and a stricter intellectual property regime, and New Delhi refusing to take on binding commitments in labour and environment are tripping the Free Trade Agreement between India and the European Union.

The India-EU ministerial level meeting, scheduled next week in Brussels, is unlikely to achieve much as the crucial conference between chief negotiators last month could not bridge differences in key areas, a Commerce Department official told Business Line.

“Commerce and Industry Minister Anand Sharma and the EU Trade Commissioner are expected to make some announcement, but it will only be high on intent and not content,” the official said.

Negotiations on the India-EU FTA, officially called the Broad-based Investment and Trade Agreement, was launched in 2007. The FTA seeks to open markets in both goods and services, in addition to easing investment and Government procurement rules.

FDI in insurance

The EU had hopes that the Insurance Bill, that proposes to raise the cap on foreign direct investment (FDI) from the current 26 per cent to 49 per cent will be passed by Parliament before the FTA is signed. Since it got delayed, the EU is now looking for some assurance that the FDI limit would be increased within a specified time. India, of course, does not want to give such assurances.

The 27-member European Union is also frustrated that its efforts in getting strong commitments on tightening of IP regime have been bootless. India had earlier refused to give data exclusivity to the EU which would lead to companies holding exclusive rights to data, without holding patents on them.

Seizure rights

India has also not agreed to give the EU Customs authorities the right to seize medicines in transit in case they suspect IP violation. “We had fought hard to make the EU realise that such seizures violate World Trade Organisation norms. We are not going to agree to give them seizure rights,” the official said.

The seemingly innocuous chapter on sustainable development that the EU wants to be included in the FTA has raised India’s hackles as that would require India to take on commitments on minimum wages, working environment and more sophisticated production processes that would raise costs.

“We are a developing country and should not be expected to match developed country standards for labour and environment protection. India cannot take on binding commitment in this area,” the official said.

India is of the view that there are institutions such as the International Labour Organisation to address non-trade issues and these should not be made part of the trade agreements.


(This article was published on April 8, 2013)
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