Jyrki Katainen, Vice-President of European Commission (Jobs, Growth, Investment & Competitiveness), was recently in India to initiate talks for an India-EU Bilateral Investment Treaty (BIT) as some of these pacts which India has individually with EU member-states are expiring soon. In an interview with BusinessLine , Katainen said EU is willing to fast-track the talks beyond the purview of the free trade agreement. Excerpts:

You held meetings with the Finance and Commerce Ministers to restart the stalled negotiations on free trade agreement or Broadbased Trade and Investment Agreement. What was their response?

Both the Ministers said they are interested in resuming the FTA negotiations and also to negotiate a new investment protection agreement. FTAs are strategically important for the EU because it helps in renewing the European economy. We would like to add India on top of the list because it is a big market.

Were you able to identify a common timeframe when the FTA talks would resume?

There is one challenge that we would like to address before the FTA negotiations and it is the continuation of bilateral investment treaties (BIT). Now when India is terminating these agreements with the European countries, it will take some time to negotiate a new BIT, which will take at least two years.

How will expiry of the BITs impact investments from the EU?

The first one, which India has with the Netherlands, will expire in the next two weeks. And the rest will expire in March, April and May. Moreover, there will be a legal gap between the time when a BIT expires and a new agreement comes to place. It’s a very serious matter. Some of the European companies have said it will adversely impact them if there is no protection on their investments at all. Because, in the interim period, it will raise capital costs and then it may harm European investments into India.

So, according to you, what could be an immediate solution?

Our proposal has been that India holds on to the BITs and not let them expire unless new BITs come in. We can fast-track the BIT talks and try to get it done as soon as possible but it will take time, may be two years or so.

Is the EU willing to negotiate the BIT out of the FTA talks?

We are ready to fast-track BIT talks. We want to have the BIT ready and implemented before the FTA is ready. But we want the legal gap filled up with something and the easiest way is to continue with the existing BITs till we have a new one. This is a practical solution for the companies that are willing to invest here.

Were you able to finalise a date for the BIT talks to start?

We have not finalised a date yet but we are ready to start as soon as possible.

Are there plans to club the BIT with FTA, at a later stage?

Yes, we can merge the two when the FTA will be ready.

How do you assess India’s model BIT?

According to our assessment, we have lots of common ground. So, it won’t be too difficult to have a joint BIT quickly and we have same interests. Although I do not know the details of the Indian model, I know there are some similarities in both models.

On the FTA, are you willing to start the talks from scratch, something that India has asked?

Both sides know each other’s priorities unless they have changed sides. But at least from the European side, our priorities have not changed. If there is a political will, we could find lots of areas in which we can find a common ground. It’s a matter of negotiations and compromise.

The present regime has made it clear that it will not go in for tariff elimination. But EU had been demanding zero tariffs in wines and spirits and automobiles?

Automotive sectors, spirits and food and beverage sectors are very important for Europe. I do not want to prejudge the outcome and there are bound to be differences and similar interests.

Indian exports to the EU had been plummeting for the last couple of years. What are you doing about it?

The EU is the world’s largest single market and we are interested in trade and investments with India.

The FTA will make it easier and cheaper. It will also bring regulatory convergence.

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