‘Germany, UK will gain the most from an India-EU free trade deal’

Germany and the UK will witness the highest absolute gains if the proposed Free Trade Agreement (FTA) between India and the European Union (EU) is concluded, states a study conducted by the Bertelsmann Stiftung of Germany.

Speaking at a round table on EU-India FTA organised by BusinessLine in association with the Bertelsmann Stiftung, Deputy Head of Mission of the German Embassy in India, Jasper Wieck, said: “We are afraid that those opposed to the India-EU FTA will keep finding reasons to delay it.”

“Some fear that the FTA will put domestic players at unease. But protecting existing investments is also a part of the FTA negotiations. I object to the notion that an FTA would put the domestic auto industry in India at risk from German counterparts.”

The study also suggested that if the UK exited the EU, India will stand to lose almost 21 per cent of the proposed gains from the FTA, which is officially called the Broad Based Trade and Investment Agreement (BTIA). As a result, India will then have to negotiate a separate trade pact with the UK to compensate for the losses, the study said.

Counsellor, Trade & Economic Affairs, EU Delegation in India, Marika Jakas, said, “We are keen on an FTA with India. The EU wants more market access in India for textile and agriculture sectors. There are very few bilateral investment treaties that have not yet expired. We have a very good reason to get FTA negotiations going to protect existing investments.”

However, Jakas said all sticky issues will be discussed when the chief trade negotiators from both sides meet next month to take stock of the matter and how to kickstart the stalled talks.

Data adequacy issue On the controversial issue of data adequacy, one of India’s long-standing demands, Jakas said it cannot be discussed under the FTA as per EU rules. She said the issue of granting India ‘data-secure’ status can only be negotiated separately.

Arpita Mukherjee from ICRIER stated that for a successful conclusion of any trade agreement, it is imperative for all the line ministries to also take part in the ongoing negotiation and not just leave it to the Ministry of Commerce and Industry.

For example, she said, when sensitive matters such as market access for agricultural items are being discussed, it is critical that the Agriculture Ministry gets involved in the talks.

Ranja Sengupta of Third World Network said, "We, as civil society remain critical of this and we think the chapter on labour and environment standards is cosmetic. It cannot really help labour, and we want a much more comprehensive monitoring framework spanning all chapters, not just on labour and environment standards. In fact we have always strongly criticised EU's Sustainable Development chapter through which they apparently show their commitment to development while demanding provisions in other chapters which can be very adverse for Indian workers."

For democracies, FTAs are not merely a function of economic benefit, BusinessLine Editor R Srinivasan said. “The fundamental challenge is that agreements happen when the leadership feels it can politically sell it. For Prime Minister Narendra Modi, it will be difficult to sell an FTA with the EU as domestic businesses will say it increases competition and can lead to job losses,” he pointed out.

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