Policy

India-EU FTA talks likely in September but no resolution yet on linking of investments, GIs

Amiti Sen New Delhi | Updated on July 26, 2021

EU insists on stand-alone pacts in three areas, India wants comprehensive agreement

India and the EU are likely to begin negotiations on the revamped proposal for a bilateral free trade agreement (FTA) in September but there continues to be disagreement between the two sides on whether to carve out separate agreements on investment protection and geographical indications (GIs), a source tracking the matter has said.

“Both sides have made significant progress on the ground work to re-start the negotiations but there is no resolution on whether to work and conclude pacts on investment protection and geographical indications separately, as wished by the EU, or go by India’s demand of linking the conclusion of all three agreements and agreeing on a complete package,” the source told BusinessLine.

There are now hopes that when officials from the two sides meet for the negotiations in September or later this year, the issue would be finally sorted out, the source added.

FTA negotiation

In May this year, at the India-EU Leaders’ meet, it was decided that the two sides would resume the FTA negotiation (formally known as the Broad-based Trade and Investment agreement) that was suspended in 2013 following differences over issues such as reduction of import duties on automobiles and alcohol and greater market access in financial services by India and greater mobility for Indian professionals in the EU countries.

India is keen for re-launch of the talks as it wants to get into trade pacts with countries that are outside the influence of China. The EU, on the other hand, wants to re-affirm its strong economic ties with India, a significant trade partner, through an FTA, especially after exit of the UK from the bloc. 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.

“Months before the India-EU Leaders’ meet, the EU had demanded that an investment protection pact and an agreement on GIs should be carved out separately from the FTA but India had not agreed,” the source said. However, the joint statement of the Leaders’ meet laid down that an investment pact would indeed happen as a stand-alone pact while the two sides would decide together the fate of the pact on the GIs.

“The Commerce Ministry, which drives all negotiations for free trade pacts, objected to the bit on a separate investments pact mentioned in the joint statement and wrote to the EU stressing that while the talks on investments and GIs could take place on separate tracks they needed to be concluded together with the FTA. The EU has not replied in the positive yet and matters are hanging,” the source said.

Since India terminated all bilateral investment treaties with partner countries, including individual EU countries, in 2017, the EU is eager to put in place a bilateral investment protection agreement between India and all EU member countries as early as possible. But New Delhi realises that the investment agreement will be a strong bargaining chip for it while negotiating the FTA and also be an inducement for its conclusion.

Similarly, the GI agreement, which will help both countries in getting their GI (sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin) recognised in each other territories, will also serve as an incentive for the fast conclusion of the FTA as the EU is very keen on it, the source added.

Published on July 26, 2021

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