EU presses India for a free trade agreement

Council President Herman Van Rompuy (left) shakes hands with Indian Prime Minister Manmohan Singh (center) in presence of  European Commission President José Manuel Barroso. From the 12th annual summit between the EU and India, held in New Delhi on 10th February 2012. (Council of the European Union photographic library).

Council President Herman Van Rompuy (left) shakes hands with Indian Prime Minister Manmohan Singh (center) in presence of European Commission President José Manuel Barroso. From the 12th annual summit between the EU and India, held in New Delhi on 10th February 2012. (Council of the European Union photographic library).

India is the most populous democracy of the world and over the past thirty years had to overcome a universe of political and economic problems. For decades the country followed an inward looking politico-economic strategy, keeping its trade and investment borders almost shut to the rest of the world. Its vast size permitted that up to a point in time.

The European Union as the largest trading block of the globe has being following very closely the internal developments in the Sub Continent.

EU-India diplomatic relations were established in the 1960s, and expanded in 1994 with the Cooperation Agreement that opened the door to political dialogue and economic and sectoral exchanges, which have since evolved through annual Summits and regular meetings at ministerial, senior official and expert-level.

During the globalisation 1990s India tried to follow the rest of developing counties in opening its economy to the world, without much success. This was felt after the turn of the millennium and the New Delhi government was forced to embark on a programme to open the country to foreign trade and investments, in order to catch up with the other populous emerging economies.

To achieve this India is now applying a slow process of economic reforms and progressive integration with the global economy, that aims to put the vast country on a path of rapid and sustained growth. However, India’s trade regime and regulatory environment still remains comparatively restrictive (low rating in World Bank’s Ease of doing business Index).

India still maintains substantial tariff and non-tariff barriers that hinder trade with the European Union. In addition to tariff barriers to imports, India also imposes a number of non-tariff barriers in the form of quantitative restrictions, import licensing, mandatory testing and certification for a large number of products, as well as complicated and lengthy customs procedures.

FTA with the EU

With its combination of rapid growth, complementary trade baskets and relatively high market protection, India is an obvious partner for a free trade agreement (FTA) for the EU.

The parameters for an ambitious FTA were set out in the report of the EU-India High Level Trade Group in October 2006, which was tasked with assessing the viability of an FTA between the EU and India. Other studies have reinforced the economic potential of an FTA between the two sides, notably a sustainability impact assessment was carried out by the EU.

Negotiations for a comprehensive FTA started in June 2007 and are still on-going. This would be one of the most significant trade agreements, touching the lives of 1.7 billion people. India today enjoys trade preferences with the EU under the Generalised Scheme of Preferences.

Not everybody is happy however with the prospect of a swift conclusion of the FTA between the two sides. There is a lot of criticism over the long-term implications of an opening of the Indian economy to EU products and investments. The obvious danger is that the relatively old fashioned structures of the Indian agricultural and industrial sectors would not sustain the pressure. It is not the same though with the services sector, where India seems to have secured some advantages, mainly in the ICT sector. But is this enough to maintain the balance?

Latest developments

Last week an Indian high ranking delegation landed to Brussels, under the Indian Minister for External Affairs, Salman Khurshid. EU High Representative Catherine Ashton after meeting with the Indian dignitaries said, “Our relationship, founded upon close cultural and historical ties, has become both wider and deeper since the Strategic Partnership was established in 2004…And as we have discussed today, we are also committed to ensuring that we conclude our Free Trade Agreement as rapidly as possible… So, Minister we took stock today of where we are, we look forward to the Summit that we will have this year”.

This was a very clear statement by Ashton showing EU’s eagerness to conclude negotiations for an FTA. The target is obviously to have it pompously signed during the next Summit.

Since 2007 intense bilateral negotiations have been pursued with the aim of concluding this ambitious and comprehensive Free Trade Agreement. Five years after the negotiations are still ongoing. That is why the EU is pressing hard for a conclusion.

The EU is India’s largest trading partner. Total two-way trade in goods in 2011 was €79.8 billion, with EU goods exports to India of €40.4 billion and imports from India of €39.4 billion. This represented a year-on-year increase of 17% on 2010. Trade in goods between the partners has more than tripled from €25.6 billion in 2000.

In 2011, EU-India total trade in services amounted to €20.4 billion. The EU has in recent years been the biggest external investor in India, with a cumulative volume of about €33.6 billion between 2000 and 2011. The EU is also the most important destination of outward investment from India.

EU’s grievances

The European Commission’s Trade and Investments Barriers Report, published in March 2012, points out that some progress has been made to dismantle trade barriers in India. Two such barriers were fully removed in 2012, namely the export restrictions on cotton and security requirements for telecommunication equipment. Progress has also been achieved with regard to sanitary and phyto-sanitary rules.

However no positive movement has been seen in the area of equity caps (agreement for an up-front premium, paid at specific time period if a stock market tops a predetermined level). India’s industrial policies contain trade-restrictive elements. The report also identified India’s national manufacturing policy as a key priority for reform.

EU-India trade negotiations presently cover, the crucial issue of access to each other’s markets, for goods, services and to public procurement contracts, the framework for investment, the rules that frame trade, such as intellectual property and competition.

In short not a few issues remain on the table before an FTA can be concluded. As a result the target for a swift termination of talks before the Summit looks very optimist.

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

These 4 Nordic countries hold the secret to gender equality

A short history of climate change and the UN Security Council

How to make primary healthcare a favourable career choice for medical students: Strategies and reflections

3 ways to nurture collaboration between universities and industry

Voices of young climate action activists ‘give me hope’ says UN chief

Asian and Pacific economies: decreases in tax revenue highlight need to broaden tax bases

Record-breaking heatwaves killed about 1,500 people in France

The European Green Deal sets out how to make Europe the first climate-neutral continent by 2050, boosting the economy, improving people’s health and quality of life, caring for nature, and leaving no one behind

The EU condemns Faroe Islands and Iceland to poverty

Financial services are changing. Here’s how

Environmental labelling, information and management schemes are central to the circular economy

Copyright: MEPs update rules for the digital age

Tragedy of Mediterranean deaths continues, as seven drown, 57 rescued: UN migration agency

COVID-19’s isolated world is the norm for people for disabilities

After the European Parliament elections – what happens next?

Greece @ MWC14: Greek-born mobile champions at MWC 2014

Shenzhen just made all its buses electric, and taxis are next

This is Germany’s $45 billion, 18-year plan to move away from coal

Migration surge leaves children stranded, begging on Djibouti’s streets

A renewed agenda for Research and Innovation: Europe’s chance to shape the future

UN human rights chief regrets closure of Burundi office following Government pressure

To flourish in the Fourth Industrial Revolution, we need to rethink these 3 things

In DR Congo, UN Security Council says December polls are ‘historic opportunity’ for country

These 5 start-ups are shaping the future of Africa’s cities

Commission: New proposal for centrally managed bank resolution

Margrethe Vestager, European Commissioner for Competition, in Brussels - Berlaymont, last week. (Copyright European Union, 2017 / Source: EC - Audiovisual Service / Photo: Lukasz Kobus)

Amazon, Luxembourg and Ireland hit by EU’s latest turn of the screw over competition

Create conditions for ‘harmony between humankind and nature’, UN chief says on sidelines of G20 in Japan

More than half of world’s refugee children ‘do not get an education’, warns UNHCR

4 ways the way we make things can change for a sustainable world

The rise of alternative medical practices in modern sports

London to say hello or goodbye to Brussels this week

Thursday’s Daily Brief: Poverty report reveals ‘vast inequalities’, measles compounds DRC Ebola woes, Guterres visits Mozambique, Bangladesh update, freedom of expression online

Growing up near green space is good for your mental health as an adult

A chemistry professor explains: why soap is so good at killing COVID-19

Ireland: prepare now for rising fiscal pressures, external risks

Commission notifies the Republic of Panama over the need to step up action to fight against illegal fishing

Voices of Afghan women ‘must be heard at the table in the peace process and beyond’ UN deputy chief tells Security Council

Burning Amazon rainforests: Darting towards the doom of Human Race

Major humanitarian hub in north-east Nigeria burned in attack

A health of all and for all based on the Ecuadorian reality

As Alan Turing makes the £50 note, how do countries design their currencies?

How did Facebook fool the Commission that easily during the WhatsApp acquisition?

Disaster Medicine in Medical Education: the investment you just can´t afford to ignore

How to harness data to tackle rare diseases

Break taboo around menstruation, act to end ‘disempowering’ discrimination, say UN experts

Scientists in Sweden are studying the climate-cooling effects of spruce forests

Efforts to save the planet must start with the Antarctic

Innovation can transform the way we solve the world’s water challenges

A new Europe for people, planet and prosperity for all

Samoa measles outbreak claims 70 lives, majority are children under five

Happens now in Brussels: Green Week sets the EU and global climate policy agenda

Thai citizenship means ‘dream of a brighter future’ for cave rescue boys, says UN Refugee Agency

European Court rules that ECB’s OMT program of 2012 is OK; not a word from Germany about returning the Greek 2010 courtesy

Sochi not far away from Ukraine

Palestine refugees’ relief chief warns Security Council money to fund Gaza operations will run out in mid-June

‘Deteriorating’ human rights in Belarus amounts to ‘wholescale oppression’: UN expert

Ethiopia is Africa’s fastest-growing economy

From coca to cocoa: three lessons from Peru on how farmers can leave the drug trade behind

Latest leaked TTIP document confirms EU sovereignty may be under threat

Digital Single Market: New EU rules for online subscription services

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s