Multiple Negotiating Rounds

7/29/2019 Multiple Negotiating Rounds

1/6

//

Multiple negotiating rounds, EU-India summits and a number of other technical meetings since 2007, have not beenable to iron out differences between the 27 nation bloc and India on the India-EU Bilateral Trade and InvestmentAgreement (BTIA). With only a "narrow political window" of opportunity left, Commerce Minister Anand Sharma's visitto Europe must be followed closely. An EU-India Free Trade Agreement (FTA) would have an impressive scale. Indiais currently the EU's 9th most important trading partner, whereas the EU is India's largest trading partner. The FTA

would set a predictable framework, slashing duties on over 90 percent of bilateral trade. While the EU-Indiarelationship has been branded a strategic partnership, set against its potential, the relationship has under-delivered.//

Indian exporters can attain higher standards with technical assistance from the EU. Moreover they are extendingprogrammes that would look to enhance capacity of trade-related regulatory institutions and enforcement systems, tomeet international standards and requirements and business needs. An issue that is polarizing public opinion is thesuspicion regarding manufacture of generic drugs. The EU had earlier demanded an exclusive chapter on dataexclusivity. By gaining rights over data, innovator companies can prevent their competitors from securing marketinglicenses for low-cost versions during the tenure of this exclusivity. This would negatively impact India'spharmaceutical sector, which has been called 'the pharmacy of the developing world'. This fear should be dispelledas the EU has withdrawn its data exclusivity clause. Despite this, many protests continue amidst the fear of a hike inthe price of life-saving drugs. Both partners need to treat this issue sensitively. Considering the impact of such anagreement, the details of the negotiations have not been made public. The public has to content itself with leaked

reports and drafts. This has caused much anxiety in the minds of the people and communication to the larger publicneeds to be boosted so as to dispel fears and clarify issues which have been addressed. There are other issues thatstill need to be ironed out. The EU has pushed for hiking FDI in the insurance sector to 49 percent. Recent newsreports suggest that the government is finally moving in that direction. Moreover there is reluctance on the part of theEU to negotiate terms on the issue of government procurement.

Read more at:http://www.moneycontrol.com/news/economy/eu-india-free-trade-pact-will-power-indias-growth-_906962.html?utm_source=ref_article

//

In the proposed free trade agreement with India, the European Union is demandingaccess to India's government procurement market for contracts above a certain cut-off

value. This is a controversial demand since it will give EU companies the right to bid forall government purchase contracts.The negotiations of a bilateral trade and investment agreement (BTIA) between Indiaand the European Union (EU) are revealing escalating aspirations on both sides for anambitious coverage. As both sides hope to conclude the agreement by the end of thisyear, the latest information is that the EU is demanding access to Indias governmentprocurement market, a market which India has not committed to open under any of itscurrent free trade agreements (FTAs) or at the World Trade Organisation (WTO). AreIndian manufacturers and service providers ready to compete with their Europeancounterparts in this very lucrative market, which also serves as an effective social and

development policy tool? What will Indian companies get in return in the Europeanmarket and will India gain on balance? And how does this compare with Indiasdomestic laws regarding government procurement?Government procurement (GP) or public procurement refers to purchases bygovernment department/agencies of goods and supplies, services and construction andpublic works. In developing countries, the GP market represents roughly 15-30% of thetotal market and is lucrative for developed country companies. In India, estimates vary
http://www.moneycontrol.com/news/economy/eu-india-free-trade-pact-will-power-indias-growth-_906962.html?utm_source=ref_articlehttp://www.moneycontrol.com/news/economy/eu-india-free-trade-pact-will-power-indias-growth-_906962.html?utm_source=ref_articlehttp://www.moneycontrol.com/news/economy/eu-india-free-trade-pact-will-power-indias-growth-_906962.html?utm_source=ref_articlehttp://www.moneycontrol.com/news/economy/eu-india-free-trade-pact-will-power-indias-growth-_906962.html?utm_source=ref_articlehttp://www.moneycontrol.com/news/economy/eu-india-free-trade-pact-will-power-indias-growth-_906962.html?utm_source=ref_articlehttp://www.moneycontrol.com/news/economy/eu-india-free-trade-pact-will-power-indias-growth-_906962.html?utm_source=ref_article


2/6

but the United Nations Conference on Trade and Development, India1 (UNCTAD India2007) estimate puts it at 13.9% of gross domestic product (GDP) in 2007, while morerecent estimates show this market is worth about $156 billion, about 12% of GDP.2 Abasic estimate shows the Indian market to be worth Rs 8,00,255 crore or $142.9billion.3The EU wants access to Indias government procurement market for contracts above acertain cut-off (called the threshold) value. This seems to be a core mandate for the EUnegotiators in most of its FTAs. This is not just about transparency in the process butabout market access, and therefore, giving EU companies the right to bid for allgovernment purchase contracts. The government cannot, in general, give specialtreatment to Indian companies and this opening up can technically include all centraland state government purchases and that by public sector undertakings (PSUs). Indiawill apparently get reciprocal access, but the literature points towards significantbarriers.//

Context of EU-India FTA negotiations: Hungry for Markets and Raw Materials

The EUs push for ambitiousFTAs is corporate Europes agenda to maintain a competitive edge in theworld economy. Key targets are so-called advanced emerging economies such as India. However, theEUs is negotiating 108 such agreements worldwide after the FTA it has signed with 15 Caribbeancountrieswith demands that the combined economic power of 27 European countries be treated on anequal basis as India. All of these FTAs will erode any special access India could hope to gain in the EUmarket through the FTA. Therefore, our domestic economy will be sacrificed for no real gains.

The European Commissions 2006 document Global Europe: Competing in a Globalized World outlinesthe EUs strategy for aggressively opening developing country markets for EU imports of goods andservices, while dismantling export restrictions and duties for raw materials from developing countries. The

document notes:

Measures taken by some of our biggest trading partners to restrict access to their supplies of theseinputs (raw materials) are causing some EU industries major problems. Unless justified for security orenvironmental reasons, restrictions on access to resources should be removed.

Major issues of concern in the EU-India FTA:

Impact on livelihoods: According to a study commissioned by the European Commission itself,the FTAwould increase EU exports to India by $17-18 billion while Indias export would increase byaround $5 billion. The impact of reducing as many as 95% of our import duties down to zero or closeto zero percent in seven years will result in import surgesespecially since EU agriculture imports inparticular are heavily subsidized in a wide range of products such as sugar, dairy, tomato paste,poultry, to name a few. Because the EU FTA will do nothing to curb EU subsidies farmers and farm

workers will be hard hit by our steep reduction of import duties to the EU. Moreover, a rapid reductionof import duties, combined with ease of entry of European agro-processing and retail firms through theservices and investment chapter of the FTA will dramatically impact how food is produced and sold inthis country. Indian farmers and workers will not be able to bargain against the power of Europesmultinational retail firms.

The ability of Indians to develop value-added agriculture products and other agriculture related servicesand industries in the future will also be severely undermined because the EU wants to export value-addedagriculture products and will dominate in this area. Signing the FTA will severely undermine the growth ofrural industries related to agriculture and further worsen rural migration and joblessness. Liberalisation of


3/6

distribution services such as those linked up and down the food distribution chain will threaten thelivelihoods of small retailers and street vendors in urban areas as well. Though official estimates statethat there are over 12 million small retail outlets in India, this number is grossly underestimated as largeinformal networks exist around retail, often composed of the poorest of the poor.

Similarly, Indias formal manufacturing sector has suffered from job loss and jobless growth in the pasttwo decadesthe flooding of EU manufactured goods and capital-intensive manufacturing firms, at a

time when Indias manufacturing sector needs to create more and decent work, not less jobs, will furtherdevastate livelihoods.

Ninety-two percent of Indias 457 million strong workforce is in the informal sector with no job security andlittle income. It is this sector that will be the hardest hit from an EU-India FTA whose objectives areincongruent with development objectives and Indias 11th year plan. The Indian Government estimatesthat it needs to create 200 million jobs by 2020 to deal with current unemployment rates and absorb newworkforce entrantsparticularly to help workers get out of low or unskilled work and low wages. With the EU-India FTAthreatening even more jobs, the livelihood situation is likely to become even grimmer inthe coming years.

EU firms hungry for our minerals and other resources: India is the third largest producer of metallicminerals including chromite and other rare earth minerals and currently restricts exports of iron

ore, non iron metal scraps and hides and skins (raw leather). European industries are hungry formetallic minerals. The FTA will be one of the key avenues for obtaining access to these naturalresources both through targeting our export restrictions and through the investment provisions ofthe FTA. On-going land and livelihood struggles related to mineral extraction are thus likely to beincreased if mining concessions to European companies are eased through the investment chapter orthese raw materials are exported to the European Market.

Trading Away Livelihoods for unclear gains: Our import duties are higher in comparison to the EU. Upto a third of our exports receive duty free access to the EU. The biggest stumbling block to our exportsto the EU are not their level of import duties, but rather their levels of food, health, environment,labeling, packaging and other standards that block our exports on various grounds. Yet, the FTA willforce us to cut our import duties, jeopardizing local production, without really affecting their standardsin any meaningful way to allow for our exports. Indias average import duties are 32% for agricultureand 10% for industrial and fisheries imports. In contrast, the EUs simple average import duties were

16% for agriculture and a mere 4% for industrial imports.Import duties are the easiest way of collecting taxes for the government since goods cannot enter withoutthe necessary duty. However, the EU India FTA along with the others that the government is negotiatingwill create a major loss of import duty income for the government and affect our national budget. This inturn is likely to have serious impacts on Government spending in social sectors like education and health.The government is also likely to compensate for this loss by raising domestic taxes.

Expansive liberalization in services and investment: Europes multinational companies dominateglobal services trade and investment. The FTAs services and investment provisions would ensuretheir ease of entry with severe implications for Indias existing and future small and homegrownindustries and businesses related to agriculture, manufacturing and services. The EU pushes for abroad definition of investment that can include every kind of asset such as movable and immovableproperty, stocks, intellectual property rights and concessions to search for minerals. Such a broad

definition of investment could commodify and thus put to risk virtually every kind of national asset.Moreover, with a change in European governance due to the Lisbon treaty, the European Commissionmay have greater powers to negotiate investment. This may mean that an investor to state clause,whereby a European company has the right to sue the Indian government in case of loss of predictedprofits, may be part of the FTAnegotiations. The EUs services and investment liberalization formulais WTO plus and as stated above virtually affects all public services and national, state and local lawsthat are seen as barriers to free trade.

The liberal entry of European banks may also further constrict the access of banking services in thecountry: geographically, socially and functionally. The urban-centric European banks largely serve the


4/6

niche market segments consisting of high-net-worth individuals and large corporations in India. Time andagain, European and other foreign banks have demanded removal of priority sector lending requirementsand other riders related to social and development banking in India. This will lead to further exclusion ofthe poor and rural areas from affordable credit

TRIPS-plus intellectual property protection: The EUs demands forTRIPS-plus intellectual propertyrights would lead to legislative and policy changes in India with regard to the scope of intellectualproperty protection and enforcement. For instance, the EU is likely to demand that India accede to theInternational Convention for the Protection Of New Varieties Of Plants (UPOV 1991) or at leastcomply with a system of plant variety protection that favours plant breeders rights over farmers rightsto seeds. India would then have to change its Protection of Plant Varieties and Farmers Rights Act2001. Such changes would have an adverse impact not only on the cost of commercial seeds but alsoon biodiversity. The EUs demand for data exclusivity and increased demands for enforcement ofintellectual property rights would also limit Indias ability to provide access to affordable medicines. InIndia, prices of medicines are the leading cause of rural indebtedness. An estimated 70% of out ofpocket spending on healthcare is on the prices of medicines alone. Any adverse changes in theavailability and affordability of medicines would be catastrophic for the majority of Indians. EUdemands would further limit the ability of the Government to issue compulsory licenses on medicines.EUs TRIPS plus demands in copyright protection will reduce access to knowledge.

Liberalising government procurement: The EU is also insisting that government procurement whichaccounts for nearly 13% of Indias GDP be opened up to EU companies. Government procurementhelps revive under-developed economic regions, boosts domestic production and thus helps fightagainst economic recession in the country. Government contracts can also help support Small andMedium Enterprises, marginalized constituencies and poorer states by channeling money throughlocal firms for goods and services. Opening this sector to powerful European companies takes awaythese necessary tools for dealing with economic recession and fostering development of marginalizedconstituencies and regions.

Creating advantages for EU MNCs through effective competition: Competition law and policy is alsopart of the negotiations with the EU. While competition policy has the potential to contribute to acountrys development, the model proposed by developed countries would have the opposite result.The EU is reportedly demanding that Indias competition policy should provide effective opportunityfor competition in the local market thus helping big EU-based multinational corporations. The EU may

further attempt to harmonise Indias competition law with EU competition law thus reducing theflexibility required for India to design a competition law and policy suitable for its economicdevelopment.

Undemocratic and Unaccountable Process of Negotiating FTAS: The government has yet to articulateits medium to long term strategy behind negotiating FTAs, let alone share any concrete details aboutthe content of each FTA negotiation. The ASEAN FTA was signed without even Chief Ministers ofdifferent states seeing the offer of goods to ten ASEAN countries. The Korea India FTA is over 1200pages long and was signed in complete secrecy by the government in August 2009. Many of thesubjects that the GOI is negotiating are state and concurrent subjects in the constitution, yetconsultations with states and the parliament has been neglected. Both the GOI and the EuropeanCommission have consistently refused to share information with civil society groups and the generalpublic. Repeated calls for transparency and accountability have been ignored undermining the basictenets of democratic process, policy making and law. The government has failed to even share its

studies regarding the FTAs it is negotiating.Livelihoods, food security, access to healthcare and financial stability threatened by EU-India FTA

In addition to creating macro-economic vulnerability, Indias FTA strategy could have major food security,healthcare and livelihood implications that must be assessed in detail. Current free trade and investmentpolicies are proving to be highly costly to citizens worldwide as governments negotiate away their right toregulate and as public funds are used to bailout corporate crimes. It is of grave concern that the GOI hashad no public debate on its FTA strategy and that the EU-India FTA and other negotiations till date havebeen marked by a gross absence of transparency and public debate.


5/6

India-EU Broad Based Trade and Investment Agreement negotiations

On 28th June 2007, India and the EU began negotiations on a broad-based Bilateral Trade andInvestment Agreement (BTIA) in Brussels, Belgium.

2. These negotiations are pursuant to the commitment made by political leaders at the India-EUSummit held in Helsinki on 13 October 2006 to move towards negotiations for a broad-based trade andinvestment agreement. India and the EU expect to promote bilateral trade by removing barriers to trade ingoods and services and investment across all sectors of the economy. Both parties believe that acomprehensive and ambitious agreement that is consistent with WTO rules and principles would opennew markets and would expand opportunities for Indian and EU businesses.

3. The negotiations cover Trade in Goods, Trade in Services, Investment, Sanitary and Phytosanitary

Measures, Technical Barriers to Trade, Rules of Origin, Trade Facilitation and Customs Cooperation,

Competition, Trade Defence mechanism, Government Procurement, Dispute Settlement, IPR & GIs. Sofar, 13 rounds of negotiations have been held alternately at Brussels and New Delhi. The 13th round was

held in Delhi during 31st March to 6th April, 2011.

India-European Free Trade Association (EFTA) Negotiations on broad-based Bilateral Trade andInvestment Agreement

The European Free Trade Association (EFTA) comprises Switzerland, Iceland, Norway & Liechtenstein.These countries are not part of the European Union (EU). Recognizing the need for enhancing bilateraltrade, a Joint Study Group between India and EFTA was established and mandated to take acomprehensive view of bilateral economic linkages between India and EFTA, covering among other,trade in goods and services, investment flows, and other areas of economic cooperation, and to examinethe feasibility of a bilateral broad based trade and investment agreement.

2. Based on the conclusions of JSG, negotiations commenced in October 2008 for the India-EFTAbroad based Trade and Investment Agreement (BTIA). The negotiations cover Trade in Goods, Trade inServices, Investment, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Rules of Origin,Trade Facilitation and Customs Cooperation, Competition, Trade Defence, Dispute Settlement andIPR.

3. 8 rounds of negotiations have been held so far, in addition to the meeting of Chief Negotiators(CNs) held on May 30-31, 2011. The 8th round of negotiations was held during June 14-17, 2011.

EU-India

The European Union and India launched negotiations on a bilateral free trade and investment

agreement in June 2007. However, between the governments, a number of controversies have been

plaguing the talks. Delhi wants Brussels to relax its stringent food safety criteria which penalise

Indian farm and fishery exports and to make it easier for Indian professionals to work in the EU.

Europe is primarily out to win major openings of Indias services sector and broad liberalisation of

foreign investment, while India does not want to discuss allowing European firms to compete in


6/6

Indias government procurement market.

Indian social movements, including fisherfolk and labour unions, people living with HIV/AIDS and

other health activists have been mobilizing against the FTA. International actions and campaigns

have particularly targeted the proposed intellectual property provisions of the agreement, and the

impact of the FTA on access to medicines.

Multiple Negotiating Rounds

Documents

Transcript of Multiple Negotiating Rounds