India is trying to persuade the European Union to come to the negotiating table to work out the contours of the proposed bilateral free trade agreement instead of putting in place numerous preconditions for starting the talks, sources have said.
“The European Commission has been sending us numerous letters on narrowing areas of divergences that negotiators had during the previous phase of the India-EU FTA talks. It is also seeking newer concessions that India is extending to some of its other trade partners bilaterally,” a source tracking the matter told BusinessLine.
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The Commerce Ministry has now sent a communication to the EU proposing that negotiations should begin across the table so that all concerns can get sorted out through face-to-face discussions and greater progress can be made, the source said.
Differences over key items
Negotiations for an India-EU FTA, formerly called a Broad-based Trade and Investment Agreement (BTIA), was launched in 2007, but was suspended in 2014 following differences over market access for key items such as automobiles, wines & spirits and dairy as well as provisions for movement of professionals, government procurement and digital trade. The EU also wanted non-trade issues like labour, environment and gender included in the negotiations.
At the 15th India-EU Leader’s Summit in July 2020, the two decided to re-start negotiations and both sides have been engaged on the matter since then.
“We realise that we have a baggage from the past but it is time for making a new beginning. India has already notionally agreed to many of the EU’s priorities such as including areas like labour and environment in the talks, although only on a best endeavour basis. The rest should be left for when the actual talks begin,” the source said.
The EU, apparently, also wants India to give an assurance that all areas that it is including in free trade deals with other partners, for example Australia or the UAE, should also be covered in the pact with the bloc.
Differences also remain over whether the negotiations on investment protection and geographic indications (GIs), which would take place on tracks separate from the FTA, should be linked to the conclusion of the FTA.
“The EU wants that there should be no link between the proposed India-EU FTA and the agreements on investment protection and GI. India, however, wants that these agreements should be negotiated separately but concluded together. This would ensure that the FTA is taken as seriously by both sides as the other two pacts,” the source said.
The EU is India’s third largest trading partner, accounting for €62.8 billion worth of trade in goods in 2020 or 11.1 per cent of total Indian trade, after China and the US, per EU figures. The EU is also the second-largest destination for Indian exports (14 per cent of the total) after the US.