EU free trade pact talks stuck despite Manmohan-Merkel push

Ashwini Phadnis Updated - March 12, 2018 at 06:57 PM.

No consensus yet on key issues; next meeting in June

The political thrust provided by Prime Minister Manmohan Singh and German Chancellor Angela Merkel during the second India-Germany Inter Governmental Consultations, barely 72 hours before negotiators from India and the European Union (EU) met in Brussels to complete negotiations on a broad-based Bilateral Investment and Trade Promotion Agreement, did not seem to be enough.

Commerce and Industry Minister Anand Sharma and the EU Trade Commissioner Karel De Gucht accepted that there was too little consensus on key issues at the moment and there was need for further negotiations and another ministerial meeting in June to finalise the pact.

Foreign Secretary Ranjan Mathai had told newspersons accompanying Singh to Berlin that the two leaders discussed specifics on how to push the India-EU Free Trade Agreement (FTA) forward.

“But they did not discuss them (specific issues) as negotiators but as people who will be giving policy directions to their teams going for the negotiations. The Chancellor, I must say, took note of the fact that Indian positions had moved very substantially since the negotiations began and she, in fact, felt that the time had come for the European side to engage very seriously at the next round of discussion and move towards an agreement,” Mathai said.

Germany is India’s largest trading partner in the 27-country EU bloc that accounts for 20 per cent of India’s external trade.

Even before Singh left for Germany, people close to the negotiations had indicated that while import duties on cars was an issue on which some give and take could take place, hiking foreign direct investment in insurance was important for the FTA to be inked.

Data security

India also had concerns that EU was unwilling to consider it as a data secure nation, something which Sharma alluded to in Berlin. Getting such a status is important, as according to EU law, European countries which want to engage in the outsourcing business with countries that are not certified as data secure have to follow strict contractual obligations. Sharma said the US recognised India as data secure although the EU did not.

In Berlin, the Foreign Secretary conceded that increasing the FDI cap in insurance was an important issue for EU, but indicated that the German side took note of Singh’s explanation that the Indian Cabinet had already taken a decision to increase the FDI cap for equity in the insurance industry from 26 to 49 per cent, although it still required Parliamentary approval.

Mathai added that the Prime Minister had also said that an attempt was being made to build a kind of consensus necessary for increasing the FDI limit in insurance.

However, now that the talks in Brussels have not reached any conclusion, and there are indications that EU is all set to begin negotiations for an FTA with the United States and Japan, where will this leave the India-EU FTA? The window of opportunity for concluding an India-EU agreement seems to be getting narrower.

> ashwini.phadnis@thehindu.co.in

Published on April 16, 2013 09:07