India, EU differ on tech barriers to trade
- During the talks between 28 November and 2 December, negotiators discussed technical regulations, standards and conformity assessment articles, according to the Report of the Third Round of Negotiations
Negotiators from India and the European Union (EU) are yet to find common ground on the issue of technical regulations and standards that act as trade or market access barriers, an update on the latest round of talks that concluded in December showed.
During the talks between 28 November and 2 December, negotiators discussed technical regulations, standards and conformity assessment articles, according to the Report of the Third Round of Negotiations.“No significant progress was made during this round due to substantial differences that exist between the EU and Indian systems, in particular as regards the Supplier Declaration of Conformity (SDoC),” according to the report.
Experts said the EU’s demands as per the draft chapter on Technical Barriers to Trade (TBT) exceed India’s commitment at the World Trade Organization. This may lead to significant compliance costs for Indian exporters in sectors like telecommunication, electrical equipment and chemicals to access the EU market, and vice versa.
Besides, the EU proposal does not provide for mutual recognition of standards and conformity assessment, which means Indian products may continue to face market access barriers even after the agreement.
An EU official said the added value of the trade agreements that the EU negotiates is linked to the inclusion of WTO+ elements and that this also applies to TBT. The key EU objective in its trade relations with India is to work towards a sound, transparent, open, non-discriminatory and predictable regulatory and business environment for European companies trading with or investing in India, the official said on condition of anonymity. “The aim is to contribute to unlocking the untapped potential of two-way trade and investment between the EU and India,” said the official.
The fourth round of EU-India FTA negotiations will be held in Brussels from 13 to 17 March 2023. TBT plays a crucial role in the electrical equipment and chemicals sector, which forms about 30% of India’s export to the EU.
Anuradha R.V., partner at Clarus Law Associates said that India would benefit if the EU recognizes India’s standards in its market, making way for more Indian exports that currently face technical barriers. However, she pointed out that the proposed chapter by the EU does not cover this aspect. “Technical regulations often act as impediments to market access. To address this, the real benefit that can be expected from the TBT chapter in an FTA is when it provides for mutual recognition of standards and conformity assessment. The EU draft chapter does not provide for this and perhaps this needs further consideration by Indian industry to facilitate true market access into the EU markets,” said Anuradha.
TBT refers to mandatory technical regulations and voluntary standards that define specific characteristics that a product should have, such as its size, shape, design, labelling/marking/packaging, functionality or performance. The Technical Barriers to Trade (TBT) Agreement aims to ensure that technical regulations, standards, and conformity assessment procedures are non-discriminatory and do not create unnecessary obstacles to trade.
The EU is also pushing for acceptance of the ‘Supplier’s Declaration of Conformity (SDoC)’, a self-declaration by which a supplier provides information to his customer concerning the originating status of the goods he provides, the EU official told Mint in a response. It is like Self Declaration of Conformity in which a supplier provides written assurance of conformity to the specified requirements.
Anuradha pointed out that while the SDoC process, which allows for self-declaration by a supplier, is a welcome step, it does not lead to lower compliance costs. “Any Indian entity undertaking SDoC needs to ensure a robust testing mechanism and retain test records for inspection or verification,” she said.
Ajay Srivastava, co-founder of think-tank, Global Trade Research Initiative (GTRI) concurred that India must push for mutual recognition agreements and conformity assessment for products and services of its interest.
Self Declaration of Conformity is a regulatory practice in the EU where the manufacturers are required to self-certify their products as part of technical regulations. This is based on the risk associated with the product. The greater the riskiness associated the product, the higher are the compliance requirements along with the declaration.
“In India, a few Technical Regulations may not be not based on risk assessment. Also, there is no regulation which allows import of products based on mere SDoC. SDoC acceptance may pose challenges,” added Srivastava.
Biswajit Dhar, professor, Jawaharlal Nehru University pointed out that one major WTO-plus provision was where the EU has sought conformity to standards by 16 international organisations, including International Telecommunication Union (ITU), International Civil Aviation Organisation (ICAO), and International Electrotechnical Commission (IEC), covering several sectors.
“Indian industry would have to conform to these standards in order to get access to EU markets. This implies that there are significant compliance costs that would have to be met for accessing the EU markets, even after the agreement is done,” said Dhar. “The WTO does not mention these organizations. Harmonization of standards under the TBT Agreement is provided as a best endeavour clause,” he said. Besides, there are special and differential provisions in the TBT Agreement to facilitate adoption of standards by developing countries, said Dhar.
“The EU’s chapter on TBT is WTO-plus and it seeks to get regulatory commitments. On the other hand, we have not gone beyond the WTO in most of our trade agreements,” said an expert on condition of anonymity.
On 17 June 2022, India and the EU relaunched negotiations for a Free Trade Agreement, and launched separate negotiations for an Investment Protection Agreement and an Agreement on Geographical Indications (GIs).
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First Published:27 Feb 2023, 11:51 PM IST
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