‘EU wants more market access, transparency in India’

Economic Times, November 09, 2006

By Amiti Sen

The European Commission is not wasting any time in getting its act together for the proposed India-EU trade and investment agreement. It has asked the Centre for the analysis for regional integration at Sussex, UK, to carry out a qualitative analysis of a potential bilateral free trade agreement (FTA) together with CUTS.

Jim Rollo from the University of Sussex – who has been roped in for the research work – to dig deeper into what the agreement holds for both the partners. Excerpts from an interview:

Since India and EU are on different levels of economic development, can a win-win situation emerge from an FTA between the two?

The high-level trade group conclusions point to areas like services where India has a distinct advantage. In services, India has cutting-edge technology and is not somewhere down the development curve. This razes the traditional view of developed versus developing countries.

Can the EU offer more in services in the bilateral agreement with India than it has already offered under the WTO?

I think issues related to mode 4 of the services negotiations dealing with the movement of professionals will present the same difficulties in the bilateral agreement as in the WTO agreement.

Problems exist on both the sides. On the other hand, there is also some convergence going on. India now has a lot more stake in mode 1 dealing with crossborder services, which was initially the EU’s area of interest.

Moreover, movement of skilled people is gaining importance for both the sides. These issues are becoming easier. But whether it translates into better offers remains to be seen.

What exactly is EU looking for in the trade and investment agreement?

The EU definitely wants more market access in services and investment. It is looking for more transparency in procedures. There are lots of approvals on EU investments which do not materialise on the ground. Then there are issues in government procurement which makes it difficult for EU firms to get engaged. In financial services, EU would be wanting more licences for European firms in areas such as banking, capital markets and investment banking.

Do you think that the FTA would bring about reduction in duties for products like textiles and leather where India has an advantage but duties in the EU are extremely high?

India and the EU have principally agreed that the FTA has to cover substantially all trade. What room there will be for sensitive products from both the sides still has to be explored. But, on the face of it there has to be something done about products like textiles and leather.

Just a couple of days before the India-EU summit in Helsinki, certain EU members said that issues such as labour and environment should also be included in the agreement. Is that being taken seriously?

We have not been asked to look into these issues in the research work that we are doing. I think we will have to wait and see what happens when we come to the discussions on the mandate for the commission. But at this stage there are no signs of the issues coming in.

This interview can also be viewed at: http://economictimes.indiatimes.com/