Time running out for India-EU free trade talks?

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Gyanendra Kumar Keshri | 09 Apr, 2013
Trade and investment talks between India and the European Union (EU) could be in limbo for years, if not concluded in 2013, as the 27-nation grouping is likely to shift its focus to a trade deal with the US.

Negotiators have missed several deadlines to conclude the deal that aims to boost trade and investment flows by removing tariff and non-tariff barriers. India and the EU started negotiations for a broad-based trade and investment agreement in 2007. The progress on the talks is stalled by disagreements on issues like import duties on automobiles, pharma and alcoholic products, and trade in services and intellectual property rights.

While the EU has been pushing for greater market access for its products like automobiles, wines and spirits, India seeks greater access for its professionals, the grant of "data secure" nation status by the EU.

Liberalisation of India's financial sector, especially increasing the FDI limit in insurance, is also crucially important to conclude the deal.

According to German Ambassador to India Michael Steiner, India's Prime Minister Manmohan Singh and German Chancellor Angela Merkel are likely to discuss the issue when they meet in Berlin April 11.

"EU-India trade and investment agreement will be on the agenda," Steiner said. Being the largest economy of the group, Germany has an important say in the deal.

The Indian prime minister, accompanied by five cabinet colleagues, is scheduled to visit Berlin April 10-12. India's Commerce Minister Anand Sharma is scheduled to meet EU trade commissioner Karl De Gucht in Brussels April 15. This meeting is expected to be the decisive one.

If the two sides fail to make any significant progress, the talks face the risk of falling into limbo for years.

The biggest reason for this is US President Barack Obama's desire to create a trans-Atlantic trade and investment partnership with Europe. The two sides are expected to formally start negotiations for the deal this summer.

EU Ambassador to India Joao Cravinho recently said India-EU trade talks would not get the same attention in 2014 and the following years as the focus will shift to a broader deal with the US. The EU and the US account for more than 40 percent of the global trade and generate almost half of the world's gross domestic product (GDP).

India will also not be in a position to show flexibility and conclude the deal because of the general elections. Manmohan Singh's government is completing its five-year term in May 2014. There might be even an early election given the political flip-flop by coalition partners and supporters of the UPA government.

"Once there is a pause, it will be difficult to conclude the deal. Historically, there is hardly any trade deal that is signed after a pause," a person in the know of the India-EU trade negotiations told IANS on condition of anonymity.

The Doha round of the World Trade organisation (WTO) is a glaring example. The talks have been lingering for more than a decade and there is no sign of success.

(Gyanendra Kumar Keshri can be reached at gyanendra.k@ians.in)