India-EU attempts to re-start free trade talks stumble on old issues

There may be no early resolution to the deadlocked negotiations between India and the EU on the proposed bilateral free trade pact.

A recent meeting between senior officials of the two sides in Brussels to get talks re-started failed to result in a break-through, a government official told BusinessLine .

“Old issues which led to the collapse of talks such as market access for wines and spirits and automobiles and inclusion of environment in the talks remain sticking points. An appropriate investment treaty is another troublesome area. Both sides haven't yet found a way to get around these,” the official said.

A team from the Commerce Ministry, headed by Commerce Secretary Anup Wadhawan, had visited Brussels last month to talk to counterparts in the EU. New Delhi is of the opinion that it has offered more than it has to any other partner in terms of increased market access in sensitive areas like alcohol and cars but the EU is not convinced.

The two sides, however, are not ready to give up their efforts. “There will be talks in the future on specific areas where there is serious disagreement. If these areas are ironed out, the negotiations can definitely progress,” the official said.

With the UK’s decision to exit the EU, the bloc may be more liberal now in terms of easing visas for Indian professionals, a key demand made by New Delhi, but it would only be in return for what it wants in terms of greater market access in the areas it has been targeting.

Negotiations for a free trade pact, formally called a broad-based trade and investment agreement (BTIA), between the EU and India started in 2007, but were unofficially suspended in 2013 when both sides realised that no movement was happening on contentious matters. Since then, periodic efforts have been made to resume talks, but there has been no positive results.

Bilateral vs single treaties

India’s decision to end/suspend bilateral investment treaties it has with its partner countries, including EU members, and seek fresh pacts based on its model investment pact is a fresh area of concern. The EU wants India to sign a single investment treaty with all members as part of the BTIA and wants a number of items suggested in the model treaty removed, including provisions on Investor State Dispute Settlement (ISDS).

“The EU is now insistent that the BIT also be part of the BTIA being negotiated and this has made the matter more complicated as there are several areas where India and the EU don’t see eye to eye,” the official said.

The EU is of the opinion that there are too many provisions in India’s model BIT which protect the government and go against the interest of the investor.

The EU, with the inclusion of the UK, is one of India’s largest trading partner accounting for $53.62 billion (17.64 per cent share) of exports and $47.87 billion (10.28 per cent of share) in 2017-18.

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