EU ready to discuss outstanding trade issues with India

The 28-member European Union is ready to discuss all outstanding trade-related issues with India, including tariffs on automobiles, in order to kick-start the stalled negotiation on a free trade agreement, people aware of the development said here.

The negotiations, started in 2007, have seen many impediments as both sides have major differences on crucial issues such as market access for services, tariffs on automobiles and wines and intellectual property protection.

“We are intensifying efforts to reach out to (Commerce) Minister (Nirmala) Sitharaman,” a person familiar with trade talks has said, requesting anonymity as he’s not authorised to talk to the media.   

The last round of talks on the FTA was held in May 2013. Several other EU officials said previous efforts to revive talks did not succeed. But with the renewed push of the Modi Government for trade and development, the EU is optimistic of kick-starting negotiations, they added. The EU is India’s largest trading partner, accounting for roughly 15 per cent of total trade in goods and services, and also a major source for foreign direct investment.

Bilateral trade between the two partners grew from €28.6 billion ($31 billion) in 2003 to €72.7 billion in 2013. EU investment stock in India grew substantially reaching €41.8 billion in 2012.  

Officials on both sides believe the proposed Bilateral Trade and Investment Agreement could boost two-way commerce further, but there are serious differences on several issues.

For example, India seeks wider access for its services industry in the EU market. An RBI report last year cited that Europe’s share in India’s software exports declined from 27 per cent in fiscal 2008 to 20 per cent in FY-2013.    

India also seeks a data secure status from the EU, saying the high cost of compliance with existing data protection laws and procedures in Europe renders its small and medium enterprises uncompetitive. The EU, on the other side, wants a reduction in tariffs on cars, wines and spirit, and a strong intellectual property regime.                   

“We are ready to look at all outstanding issues, including automobiles,” said the person cited above. “We consider India a very important partner. What we need is a political commitment from the highest level in New Delhi. Then we can take forward all issues.”

The EU is also seeking further liberalisation in the insurance and retail sector. “India has raised FDI cap in multi-brand retail, but again it’s in the court of States whether multi-brand companies should be welcomed or not.

There’s a similar problem in the insurance sector as well. The Government has passed ordinance. But companies are not ready to invest as it’s not approved by Parliament,” said another official, who also did not want to be identified.        

The EU is also expecting a bilateral summit to take place later this year. But the dates are not finalised yet.

Later this month, an EU Parliamentary delegation headed by European Parliament member Geoffrey Van Orden would visit India where they will discuss several issues including trade.

Prime Minister Narendra Modi had met the then EU President Herman Van Rompuy in November last year in Brisbane, Australia, on the sidelines of a G-20 summit.

During the meeting, both sides had discussed the FTA.    

“The trade agreement will be a win-win deal for both Europe and India. We should move forward. Europe is really committed for that,” said another top official.

However, Indian diplomatic officials have said New Delhi has informed the EU its position on the contentious issues in the FTA. “Now the ball is in the EU’s court,” said one diplomat.

The writer was in Brussels at the invitation of the European Commission

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