Diplomatist Magazine Diplomatist October 2019 | Page 54

INSIDE EUROPE
the negotiations between India and the EU highlighting the
contentious issues, and what next for the agreement.
Background to the Negotiations
The diplomatic relations between India and EU were
established in the 1960s, however, the 1994 Cooperation
Agreement opened the door for larger political interactions
between the two. In recognition of
both sides’ political and economic
importance, the EU-India Strategic
Partnership was signed in 2004 to
enable the partners to better address
complex international issues. For
this objective, at the 2005 Summit
EU-India Joint Action Plan was
adopted which defined common
objectives and proposed a wide
range of supporting activities in the
areas of political, economic, and
development cooperation. Under the
aegis of this Joint Action Plan, High-
Level Trade group was established
which recommended the initiations of
negotiations for a comprehensive free
trade agreement – called Broad Based
Trade and Investment Agreement
(BTIA) - between India and EU. A
go-ahead was provided during the
seventh summit in 2006 in Helsinki
move towards negotiations which
were then launched in 2007.
The negotiations in their initial
stages were largely on select issues
like trade in goods and services,
investment, intellectual property,
public procurement etc. The roadmap
for negotiations included: fi rst, trade
in goods which included elimination
of duties on 90 percent of the tariff
lines and trade volume within seven
years of the entry into force; second,
trade-in services so as to ensure
maximum sectoral coverage measured
in the number of sectors, volume of
trade and modes of supply; and third,
investments by improving the market access and providing
non-discriminatory treatment to foreign investors.
However, the fundamental diff erence in the approaches
between the two partners led to the suspension of the
negotiations in 2013. While the European Union wanted
deeper integration of the two regions, i.e. not just the removal
of border barriers to trade but also to include policies and
institutions which would then facilitate trade by reducing
impediments to the trade. India, on the other hand, did not
agree with this argument. For India this would have been
the most ambitious bilateral economic pact and, if signed
and ratifi ed, it would have covered the highest level of
commitments including trade in industrial and agricultural
goods, services liberalisation etc.
Contentious Issues in the
Negotiations
There are four major contentions in
the negotiations of the BTIA – fi rst is
in trade in goods, EU’s major demand
is that India should lower its tariff s
on automobiles, wines and spirits.
India has highlighted its concerns that
while lowering the tariff s may result in
increasing trade volume but could also
lead to the European imports fl ooding
the market. On the other hand, India
has demanded the lowering of the
non-tariff barriers such as sanitary
and phyto-sanitary barriers along with
the strict technical barriers to trade
which EU has imposed along with the
labelling requirements and trademark
norms which have led to the reduction
of Indian exports to the EU market.
Second is in the trade-in services.
This appears to be the most contentious
area in the BTIA negotiations. The
area of disagreement is in Mode 1,
3 and 4 as defined by the General
Agreement on Trade and Services.
Mode 1 relates the outsourcing of the
activities like knowledge, business
etc., however, it appears unlikely that
the EU would outsource the supply of
services to the Indian market given the
economic situation of the European
economies. Under Mode 4, the Indian
professionals are supposed to get
the preferential access to the larger
European labour market; this also
appears unlikely given the increased unemployment rates in
various European countries and also the prevailing political
environment with rising anti-globalisation and Eurosceptic
sentiments. The Mode 3 is where EU disagrees with India,
Mode 3 serves to include further liberalisation of the FDI
in multi-retail brands like insurance, banking sector. This is
The EU wants India to
strengthen its intellectual
property rights regime,
for instance, with regard
to pharmaceuticals. Indian
legislation bans both
‘ever-greening’ of patents
and the exclusivity of test
data (protection of clinical
trial data), saying they
jeopardise the sale of low-
priced generic drugs and
chemicals in its territory.
54 • Extraordinary and Plenipotentiary Diplomatist • Vol 7 • Issue 10 • October 2019, Noida