New Delhi: The European Parliament has asked the European Commission and India to conclude a free trade agreement (FTA) by 2010 but the commerce ministry said it was too early in the negotiations to set a specific deadline.
Rule book: Pedestrians walk past the European Parliament in Brussels. The parliament has also called on India to sign the non-proliferation treaty, despite NSG lifting its embargo on the country’s nuclear trade. Francois Lenoir / Reuters
“At present, preparatory work is going on. No one can guarantee (a timeline), it depends upon the pace of negotiations,” said a ministry official involved in the negotiations.
“The schedules, offers and requests are yet to be discussed, which are considered the meat of any bilateral trade negotiation,” he said on condition of anonymity.
The European Parliament is a legislative branch of the European Union (EU) of 27 nations and the Commission is its executive branch.
Talks for an India-EU FTA started in 2007 and the sixth round of negotiations was held in New Delhi last month. The next round, tentatively scheduled for July, will be held after a new government at the Centre takes charge. India is electing a new Lok Sabha and results of the poll will be announced on 16 May.
“Progress made in the next round of discussion will determine how soon the negotiations could be completed,” the ministry official said.
In a resolution adopted in Strasbourg, France, on 26 March, the European Parliament also said the India-EU FTA should conform to the World Trade Organization (WTO) agreement on standards relating to packaging, marking and labelling, besides its benchmarks to protect human, animal and plant life.
The ministry official claimed it has convinced the EU to negotiate on these non-trade issues, which India fears may come in the way of greater market access by Indian companies.
Among the contentious issues that the EC has raised during the discussions are those that relate to industrial subsidies and child labour.
“They have raised the issue of industrial subsidies in India, but we have refused to negotiate on those issues,” the official said. “On labour issues, the contention remains. India has well-established labour laws and it follows ILO (International Labour Organization) convention. Domestic laws in this regard are adequate.”
The European resolution, passed by 326 votes in favour, 226 against and three abstentions, cautioned India against renouncing capital controls while committing to liberalizing capital movements under the investment pact in the FTA. “...such clauses should be approached with extreme caution, given the importance of capital controls, especially for developing countries, in mitigating the impact of the financial crisis…,” it said.
The European Parliament also regretted the fact that India is not willing to include public procurement in the FTA and called on the country to apply transparent and fair procedures when awarding public contracts and grant access to public procurement systems for European businesses.
Holding that human rights and democracy constitute an essential element of the FTA, the parliament has raised its concern regarding the “continuing persecution of religious minorities and human rights defenders in India” and the current human rights and security situation in “Indian-administered Kashmir”.
It has also called on India to sign the nuclear non-proliferation treaty, even though the Nuclear Suppliers Group has lifted its embargo on India’s nuclear trade. However, the ministry official said: “We have clearly told them that discussion will be limited to trade and investment and issues related to trade and investment. Sovereign issues are of our own and non-negotiable.”
The Forum on FTAs, an umbrella group of 75 non-governmental organizations, has protested an FTA with the EU. Members of the forum courted arrest during the latest round of talks in New Delhi last month.
J. John, a member of the forum, criticized the lack of transparency on the part of the government in its FTA negotiations. “All FTAs should be ratified by the Parliament like in other countries. We want the government to be open to the civil society and hear their perspective.” Though the commerce ministry official said he had met representatives of the forum and discussed details of the negotiations, John denied having had any “substantial discussion” with the government in this regard.
Denying the charges that India has kept the farm subsidies given by the EU out of the FTA negotiations, the official said the issue is being taken up separately at WTO. “If we realize that import of a particular farm item may cause harm to the domestic producers, we can simply increase the tariff on the item,” he said.
The EU is India’s largest source of foreign direct investment (FDI), accounting for €10.9 billion (Rs70,959 crore now), or 65% of all FDI inflows in India in 2007. India was EU’s ninth-most important trading partner in 2007.