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Trade minister Anand Sharma is scheduled to meet his EU counterpart on Monday. Photo: Fabrice Coffrini/AFP (Fabrice Coffrini/AFP)
Trade minister Anand Sharma is scheduled to meet his EU counterpart on Monday. Photo: Fabrice Coffrini/AFP
(Fabrice Coffrini/AFP)

Fresh hurdle for free trade deal with EU

Parliamentary panel directs government not to move ahead until its members get chance to review details of accord

New Delhi: The government’s plan to bring the long-drawn negotiations on a free-trade agreement (FTA) with the European Union (EU) to a close next week faced a setback, with a parliamentary panel warning that such an accord should not be signed without the pact being examined by its members.

With India’s trade minister Anand Sharma scheduled to meet his EU counterpart Karel De Gucht in Brussels on 15 April, the parliamentary standing committee on commerce on Thursday directed the government not to move ahead with the trade pact until its members had the opportunity of reviewing the details of such an accord, according to two people with knowledge of the development.

The committee, headed by Bharatiya Janata Party (BJP) leader Shanta Kumar, expressed concern that the deal would lead to the flooding of India’s markets with European surplus dairy products, hurting Indian farmers, and harming the business of cooperatives such as Amul.

Although the matter was not on the agenda of the committee’s meeting, the issue was raised owing to the urgency of the matter, said a committee member belonging to an opposition party, who spoke on condition of anonymity, since members are not allowed to disclose deliberations at such meetings.

Another member of the committee, who belongs to the ruling coalition, confirmed that the resolution seeking scrutiny was passed unanimously. “We want to know more about the deal. That does not mean we oppose the deal," he said.

While there is always an element of secrecy in bilateral trade negotiations, unlike multilateral talks, more information should be disseminated before closing the deal, said a trade expert who didn’t want to be named.

“Government should tell how various wish lists have been addressed in the deal," he said.

T.S. Vishwanath, principal adviser at APJ-SLG Law Offices, said concerns expressed by the standing committee members are genuine and they need to be properly briefed by the government.

“India must close the deal keeping in mind its own interests," he said. However, the committee should not interfere in the timelines for such negotiations, Vishwanath said.

Unlike countries such as the US and groupings such as the EU, the Indian government doesn’t require legislative approval for bilateral trade agreements. In the US, the government needs a negotiating mandate from Congress before starting any trade negotiations. As for the EU, even after closing negotiations, the deal has to be vetted by the 28 member countries, which can seek changes in the agreement.

Senior BJP leader and Public Accounts Committee chairperson Murli Manohar Joshi on Wednesday demanded a comprehensive debate in Parliament on all FTAs, especially the proposed pact with the EU.

Speaking on behalf of the BJP, Joshi warned the government against signing the proposed trade deal with the EU, holding that it would lead to a flooding of the Indian market with dairy, poultry, sugar, wheat, confectionary and oilseeds, among other products.

The deal, touted as India’s most ambitious trade agreement, has been facing opposition from several quarters such as healthcare activists and automobile companies since talks on the bilateral trade and investment agreement started in 2007. The two sides have missed at least four deadlines to complete negotiations.

The Society of Indian Automobile Manufacturers (SIAM) lobby group said on Wednesday that customs duties on fully imported cars and engines must not be lowered as is being proposed in the negotiations, adding that such a step will severely harm the sector. Releasing a White Paper on the proposed India-EU FTA and its possible implications for the automobile sector, SIAM said, “It has to be avoided at all cost".

It said that only the EU would gain through the FTA as it is a declining market in terms of automotive exports, while India is a rapidly growing market.

“SIAM is deeply concerned with the way India-EU FTA negotiations are taking place. From the beginning of the negotiations, EU had said that India-EU FTA cannot be concluded without completely built units being included in the FTA," it said.

Amul has said the proposed trade agreement could undermine the interests of small and marginal farmers who are dependent on selling milk for their livelihood.

“It is important to note that EU does not permit import of dairy products from India in the name of SPS (sanitary and phytosanitary) measures, saying that Indian milch animals are not maintained as per EU standards and hence the dairy products are not safe for consumption," R.S. Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF), wrote in a letter to Sharma on 22 March. GCMMF sells products under the brand name Amul.

Sodhi further said that the EU could dump its highly subsidized dairy products in India at lower prices if market access was granted.

“Unfortunately, under the FTA, India cannot negotiate on these subsidies, but we must remember this while negotiating any FTA, especially related to any agricultural products," he said.

One of the key items on the agenda in the meeting between Prime Minister Manmohan Singh, who is currently visiting Germany, and Chancellor Angela Merkel is the trade pact between India and the EU.

After meeting Merkel in Berlin on Thursday, Singh said in a statement that both sides had agreed on the importance of an early conclusion to a balanced India-EU broad-based trade and investment agreement.

Speaking after meeting his German counterpart Guido Westerwelle, India’s foreign affairs minister Salman Khurshid told reporters on Wednesday that he hoped the FTA could be concluded “as quickly as possible".

PTI contributed to this story.

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