PARIS: India and the European Union (EU) are now aiming for a comprehensive Free Trade Agreement (FTA) rather than an interim deal, and is working against a tight deadline to conclude it.
Stating that the plan is to sign a “full-scale FTA,” an official said a lot of progress has been made in the negotiations and only some loose ends need to be tied up. “The situation remains dynamic,” he added.
On Tuesday, French minister of foreign trade Laurent Saint-Martin said here he is “pretty optimistic about the fact that we can have an agreement in the coming weeks, coming months.”
He stressed that the deal is “because we have to showcase to the world that we do believe in trade, in freer trade, and not in a trade war.” “So this is what we agreed on,” French minister said after a bilateral meeting with India’s commerce and industry minister Piyush Goyal. “India is one of our priorities and I know the European Commission really wants to accelerate (FTA),” he added.
In February both India and EU had set a deadline of this year-end for conclusion of negotiations and having an outline of the deal.
The India-EU has 23 chapters and all of them barring one or two at the periphery of trade may be kept out, the official quoted above said.
The EU regulations regarding carbon emission – Carbon Border Adjustment Mechanism (CBAM) and Deforestation Regulation (DR) – that will have a direct bearing on trade are also being discussed by both sides.
The key chapters dealing with core trade issues in India-EU of the FTA – negotiations for which began in 2022 – are trade in goods and services, rules of origin, customs, technical barriers to trade, trade remedies and dispute settlements.
The agreement also has to cover areas like government procurement, intellectual property, competition, merger control and subsidies, transparency and good regulatory practices and sustainable food systems.
Apart from FTA, a Bilateral Investment Treaty (BIT) and an agreement on Geographical Indications (GI) is being discussed by both sides. The conclusion of FTA will precede the other two agreements, the official added.
French minister of foreign trade Laurent Saint-Martin said that France wants to lower barriers – both tariff and non-tariff barriers while taking care of its sensitivities in agriculture, environment and sanitary norms. “At the end every deal is a consensus. So every party has to understand each party’s concerns and sensitive issues.”
The French Minister said trade between India and France of $ 15 billion is below potential and advocated increasing business collaboration and investment between the two countries.
“So we can do more. It’s true in terms of export. It’s also true in terms of cross investment and co-investment. I do believe in Joint Ventures that can be in India or in France that have to be accelerated,” he added.
The key ask for India from the EU in its negotiations is zero tariffs on labour intensive exports and greater access to the services market of 27-member grouping. The EU is pushing for India to cut tariffs on cheese and skimmed milk powder, which India currently shields through high duties to protect its domestic dairy industry. Indian officials say that they would be unwilling to provide concessions in dairy in any of the FTAs. Even in the UK FTA dairy has been kept out.
European winemakers are pushing for greater access to the Indian market, where imported wines currently face a 150% tariff. The EU wants India to eliminate or significantly reduce these duties to 30-40% levels. India may like to match what it offered to Australia under the ECTA, where tariffs on Australian wines were slashed to 50% in 10 years.
European car manufacturers want India to cut import duties on completely built-up (CBU) vehicles to 10-20%, down from the current 70%. The EU already exports over $2 billion worth of automobiles and auto parts to India annually, with most arriving in completely knocked-down (CKD) form, which face a 15% tariff when assembled locally.
Source: The Financial Express
