1st APRIL 2016
Answer questions in NOT MORE than 200 words each. Content of the answer is more important than its length.
Links are provided for reference. You can also use the Internet fruitfully to further enhance and strengthen your answers.
GS II: BILATERAL – INDIA-EU
1. What are the areas of cooperation between India and EU? Why has the India-EU Broadbased Trade and Investment Agreement (BTIA) failed to take off?
Areas of cooperation between India and EU
The fields of cooperation between India and EU are many, and defined by the EU-India Agenda for Action-2020, , which sets strategic priorities for the next five years. The sectors of partnership range from foreign policy, counter terrorism and disarmament to transport and space.
1. Trade - BTIA
· The India-EU BTIA talks started in June 2007 and have since discussed issues related to trade in goods and services, sanitary & phyto-sanitary measures (SPS), intellectual property rights, technical barriers to trade (TBT), dispute settlement, customs and trade facilitation and procurement among others.
· The EU is India’s largest trading partner, with bilateral trade amounting to $126 billion. The EU is also the largest export destination for India, and a source of $69 billion in FDI.
· The India-EU BTIA is paramount owing to the fact that it will give a projected leapfrog bilateral trade between the two. Added to this is that the fructification of the trade agreement would slash duties on over 90 per cent of the bilateral trade. Along with helping in more job creation, the trade agreement would also let EU to have a greater say in the Asia’s commercial sphere.
Joint declarations have been announced at the 13th India EU Summit held recently, on the India-EU Water Partnership and a Clean Energy and Climate Partnership.
For the ‘Clean India’ initiative and the ‘Ganga Rejuvenation Initiative,’ the EU will help in developing a solution to clean up the river as well as developing legal and governance frameworks for managing the basin.
The two sides agreed to cooperate in countering violent extremism, disrupt recruitment of terrorists and prevent the free passage of foreign fighters in a joint declaration on counter terrorism, which also called for the early adoption of the Comprehensive Convention on International Terrorism in the UN. They have also agreed to explore the possibility of India and EUROPOL, the EU’s law enforcement agency, to share intelligence.
The Common Agenda on Migration and Mobility (CAMM), which was also adopted, is designed to control and organize migration – a pressing concern for the EU. Significantly for the EU, the Agenda for Action includes items on facilitating the return of irregular migrants and the possibility of exploring a ‘Readmission Agreement’ — returning visa over-stayers to their home countries.
The Agenda also includes the prevention of human trafficking and promoting international protection as priority areas. Points of special interest to India on the agenda are likely to be easier visa procedures for skilled workers, IT professionals, and business travellers. For now, the CAMM is a political declaration and not a legal agreement.
5. Concessional Loans:
India is no longer eligible for development assistance from the EU. However, India will still have access to concessional loans from the European Investment Bank (EIB). India and the EIB signed the first tranche of a Euro 450-million-loan at the Summit towards the construction of a metro rail line planned in Lucknow.
Issues stalling BTIA:
· India has been pushing for opening European markets for its services sector and the movement of people to deliver those services while the EU has been keen on reducing or abolishing tariffs in several sectors, including in the automobile and wine and spirits sectors. The Brussels meetings evidently did not see the closing of gaps between the two sides.
· In 2015, a ban on 700 generic Indian drugs in the EU, on procedural grounds, struck a blow to the free trade talks. The 13th India-EU Summit concluded in Brussels without a consensus on a bilateral free trade deal known as the BTIA (Broadbased Trade and Investment Agreement)
· Some of the major issues stalling BTIA are:
1. Safeguard clause introduced for the Mode 4
· A major issue which is of concern to India is related to the safeguard clause introduced for the Mode 4 (the supply of a service by nationals of one Member, through the presence of natural persons of the Member in the territory of any other Member) quota which would substantially puncture the expected gains from this.
· Hence, India seeks that for the movement of natural persons for providing services under Mode 4 to happen, the safeguard clause should be removed to 20 per cent threshold beyond which the clause could operate.
2. India not recognized as a Data Secure Nation hampering Mode 1:
· India is unhappy with the EU not recognising it as a “data secure nation”, and with what the EU has to offer in the area of IT/BPO/KPO services (Mode 1 – cross border trade) and the movement of skilled professionals (Mode 4).
· According to a study done by Boston Consulting Group, it is expected that because of Mode 1, there would be over six million jobs and a generation of revenue worth USD 170 billion by 2020 in India.
3. Reduction of duties on automobiles, wines and spirits demanded by EU
· Another roadblock is the reduction of duties on automobiles, wines and spirits. In the automobile sector, EU has sought for tariff cuts from the existing 60 per cent. In the case of wines and spirits, EU is looking for further reduction in duties from the existing 150 per cent. A middle road could be arrived through a mutually acceptable duty cut.
4. Sanitary and Phyto-sanitary (SPS), Technical Barriers to Trade (TBT) and Non-Tariff barriers (NTBs)
· India has also conveyed her concerns regarding Sanitary and Phyto-sanitary (SPS), Technical Barriers to Trade (TBT) and Non-Tariff barriers (NTBs).
· Keeping in mind the levels of economic development, India has asked EU to eliminate tariffs on at least 5 per cent more tariff lines and 5 per cent more trade volume than what India does. This will help India take deeper revenue cuts on account of duty elimination/reduction. But EU has flagged difficulties in achieving asymmetry of more than 4 per cent.
· India has sought the elimination of NTBs as it is of the opinion that mere reduction in tariffs will not pave the way for increased trade.
· At the same time, India has stated that its exports to EU have been hampered by EU’s SPS measures, which had its impact on the exports of agricultural and food products, and also by TBT, which had grossly affected the exports of industrial products.
5. Intellectual Property Rights:
· The India-EU FTA has also impacted the Indian pharmaceutical industry. It is well-known that Indian pharmaceutical industry obliges to World Trade Organisation’s (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS). But, now EU is asking India to adopt intellectual property protection standards more than what is under TRIPS. India has clearly conveyed to the EU that India will limit any agreement to its existing laws and to obligations under TRIPS. India has clearly stated that it cannot go beyond the same.
6. Marines issue
· In 2012, India arrested two Italian marines Massimiliano Lattore and Salvatore Girone, charged with killing two fishermen off the coast of Kerala.
· Both India and EU have officially expressed their confidence in the legal processes of the Permanent Court of Arbitration, The Hague where the case of the Italian marines is currently been heard.
· The EU also expressed a swift solution, “through due process of law” in the case of MV Seaman Guard Ohio, where 14 Estonians and six Britons were arrested in 2013 and sentenced in India.
7. India, EU and human rights
· One of the ostensible reasons for stalled talks between the European Union (EU) and India had been the EU’s concern over human right violations in India. Several Members of the European Parliament (MEP) have, in the past, expressed concerns in this regard.
· A recent letter from Human Rights Watch, an international NGO, to the EU leadership brings up issues of NGO harassment and the overlooking of rights of marginal groups in development projects in India in the context of the India EU Summit. A joint statement from India and the EU reiterates the importance that both countries officially accord human rights and the rights of women.