India and the European Union (EU) are resuming talks on a free trade agreement (FTA) from tomorrow.

The negotiations, to be held in Brussels, would go on till September 14, but any meaningful progress towards a viable conclusion seems far-fetched. Officials on both sides are tight-lipped, as more pressing and deeper problems have surfaced in the bilateral relations.

Indian negotiators are hopeful of a positive outcome this time, even as stiff differences still exist on both sides over greater tariff concession and more market access.

“The road ahead is tough but it is not a rocket science. We have clearly communicated our stance (to EU) that we cannot go any further beyond a point,” a senior commerce department official involved in the negotiations told Business Standard.

Apparently, the EU had been unrelenting on its demands for more tariff concessions in India’s automotive sector. This has drawn strong opposition from auto makers in India, who protest that cheaper imports would result in massive job losses. Similar problems have risen with the wines and spirits sector.

EU has also sought a stronger implementation of the Intellectual Property Protection norms that might affect the country’s generic drugs industry, which exports almost 67 per cent of its produce to developing and poorer countries.

It has also asked for an exclusive chapter on data exclusivity to which India had already asserted it would not extend data exclusivity that would hamper the domestic pharmaceuticals industry. By gaining exclusive rights over this data, innovator companies can prevent their competitors from obtaining marketing licence for low-cost versions during the tenure of this exclusivity.

Data exclusivity provides protection to the technical data generated by innovator companies to prove the merit of usefulness of their products. In the case of pharmaceuticals, it means the data generated by drug companies through expensive global clinical trials to prove the efficacy and safety of their new medicine.

Moreover, India has also rejected EU’s demand for human rights, child labour and environmental standards to become a part of the trade deal. Another sticky point that remains unresolved is tariff reduction in agriculture.

Plans to seal an ambitious deal with the 27-nation bloc was launched with much fanfare in India in 2007. But even after 13 rounds of talks, there seems to be no meeting point.

The yearly ritual of holding the India-EU Summit is scheduled to take place in New Delhi on October 24, which might also help in nudging the talks forward.

Last year, Commerce and Industry Minister Anand Sharma had said the agreement would be broadly agreed upon and would be initialed by April, while it would be formally concluded by October-November. But according to officials in the ministry, there are very high chances of the talks getting stretched into 2012.

As much as 90 per cent of the bilateral trade in goods and services would be covered under the pact. While EU had been demanding greater access into India’s markets for its products with significant tariff reductions, India had been demanding greater opening and job opportunities for professionals like doctors, nurses, chefs, accountants who would be to travel to EU countries with a relaxed visa regime.

The agreement will lead to increased opportunities for market access in both goods and services for each other, according to Sharma.

September 12, 2011

Source: Business Standard, India