By Devanshee Dave
There have been talks concerning the Bilateral Trade Investment Agreement (BTIA) between India and the European Union since 2007, but a deadlock has been in place since 2013. While there have been many ups and downs in the trade between both the sides, India is finally set to resume the free trade agreement (FTA) with EU.
A FTA or a biased agreement?
The EU wants India to reduce taxes on liquor (which would benefit France) and automobiles (which would benefit Germany)overall, the EU wants more market access with less duty interference. The last time that India had closed the negotiations on automobiles was in 2013. At that time, India offered the EU lowered duties on imports of European cars, but imposed a quota restrictionwhich was then rejected by the EUdemanding a zero duty access to the Indian auto market. This was obviously unacceptable to India, as India is presently trying to set up its own automobile industry. Further, Indias offer to the EU would be exceptional as India does not provide such privileges to the other countries like Japan, South Korea, and any other Asian countries.
Whereas, in terms of the trade of goods, India faces issues on the sanitary and technical measures. EU has the power to impose stringent labelling requirements and trademark norms which have adverse effects on Indian exports just as several years ago, Indian Alphonso mangoes faced the same issue. EU has to understand that coin cannot be prefixed to turn on the same side every time.
BTIA and BIT
The 14th EU-India Summit is going to be held in October this year where India can resume the FTA talks. India has currently stopped the BTAI as it wanted to implement the new Bilateral Investment Treaty (BIT) for which there were sudden disagreements between EU and India. As a consequence, India has decided to lapse the same whereas EU wanted India to continue the existing treaty until EU-India FTA is signed, which would have an investment chapter in it. In 2016, India implemented the BITs. Under the BITs, there is a provision of Investor-State Dispute Settlement (ISDS) which seek a foreign company to go through the domestic jurisdiction process for at least five years before going to international arbitration in case of any dispute; the EU is against this provision.
EU and India partnership prospects
There are some prospect areas of trade between EU and India such as a partnership for smart and sustainable urbanization and promoting the agenda of Indias 100 Smart Cities Mission. In addition to that, the European Investment Bank (EIB) loan for the Bangalore metro project is also in process. There are talks to strengthen security cooperation by expanding the counter-piracy dialogue to maritime security and by establishing a new dialogue for cybercrime and counterterrorism. As per an EU officials statement, We have had recently good and concrete dialogue on cybersecurity and counter-terrorism and on maritime security. And these are certainly key fields where we can deepen our cooperation.
The geopolitical factors
In May of this year, Indian Prime Minister Narendra Modi visited Germany and talked with German Chancellor Angela Markel, who asked Narendra Modi to resume the EU-India FTA. As this meeting indicates, there are certain geopolitical factors attached to the EU-India FTA. One of these is China’s ambitious One Belt One Road (OBOR) project, which aims to expand its hold in Asia. OBOR started in 2013 and is investing billions of dollars in infrastructure, railways and ports in Asia, Africa, and Europe.
The Indian issue with OBOR is the anticipated interference in Pakistan occupied Kashmir (Pok) through the China-Pakistan Economic Corridor, as well as the increasing movements of China in Indian Territory of the Indian Ocean. India skipped the invitation to attend the OBOR conference in May this year, whereas the EU sent its representative but didnt sign any agreement. As per Germanys ambassador to India Martin Ney, if both EU and India have hesitation to join OBOR project, then they must sit and talk about their own FTA.
Additionally, the USA has withdrawn from the Trans-Pacific Partnership (TPP) in keeping with its recent America First movement. In the wake of this, it would be ideal for India and the EU to set an example of free trade. On the other hand, India has issues with Regional Comprehensive Economic Partnership (RCEP) due to the decreased duties and application of zero percent duties on the imports of most of the products from RCEP nations. This can increase the market accessibly of China in India, and thus Indias stand on it is not fixed yet.
After Brexit, it could be easier for India to negotiate the terms of FTA with EU. Until now, there were strict rules for Indian workers and skilled labourers to get a visa in the UK. On the other hand, the UK wanted to get more reduction in its whiskey and other alcoholic products in India but didnt want to liberalize its Visa rules for India. So, now as the UK is out of the EU, there is a staunch chance for India and EU to negotiate better terms for a Free Trade Agreement.
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