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The leaders of the EU and India will pledge to conclude a far-reaching bilateral free trade agreement (FTA) early next year during their annual summit, on 10 December in Brussels. Indian Prime Minister Manmohan Singh and the President of the European Council, Herman Van Rompuy, are expected to give a political boost to the trade talks launched in 2007, which have accelerated over the past few months and are now entering a decisive phase. "What we are aiming for is for the leaders to commit to a date for the completion of the FTA," a European Commission source told Europolitics. "The idea is to inject some political momentum into the talks in order to conclude the negotiations around spring," said the spokesperson for Trade Commissioner Karel De Gucht. The summit participants will also aim at deepening the strategic partnership between the EU and New Delhi by discussing global and regional issues. Climate change, the G20 and the fight against terrorism are also on the agenda.


The meeting will highlight the growing interest of EU policy makers and companies in the huge emerging Indian market. The Asian country has a population of almost 1,2 billion people. Earlier this week, French President Nicolas Sarkozy and First Lady Carla Bruni-Sarkozy made a high-profile visit to India to conclude several landmark deals, including in the field of nuclear technology. Following the Brussels summit, Prime Minister Singh will fly to Berlin to discuss ways to enhance bilateral trade exchanges and technological cooperation with German Chancellor Angela Merkel. EU exporters increasingly see a huge untapped potential in the Indian market, which is relatively less open than China's, and they consider it a strategic location for their business in the coming decades. Hence, Singh will address an EU-India business summit on the margins of the meeting in Brussels, with issues like clean' energy and transport and infrastructure topping the agenda. "The FTA would spur an advantageous expansion in global trade when it is vitally necessary to so do. It would give European businesses access to a huge potential market with a strong and steady growth rate," commented the European Service Forum (ESF).

Against this backdrop, the EU sees the ongoing FTA talks as a golden opportunity to get preferential access to this massive market ahead of its competitors, in particular from the US. Building on the successful conclusion of a far-reaching FTA with South Korea, a first for the EU in Asia, European negotiators are accelerating their efforts to find a compromise with New Delhi. "The date we are looking for is March 2011," a Commission source told Europolitics. The Indian Commerce and Industry Minister, Anand Sharma, confirmed that New Delhi was on the same page. "The next round of negotiations will be in December. By March, we expect to conclude the negotiations on the FTA," Sharma told Indian reporters. The minister visited De Gucht in Brussels last week to take stock of progress achieved over the past few weeks and to prepare for the summit.

After a slow start in 2007 marked by conflicts over the scope of the future agreement, talks have picked up since the middle of 2010. DG Trade and its Indian counterpart have changed their negotiating methodology, focusing on low-key technical meetings rather than high-profile negotiating rounds. The EU's chief negotiator, Ignacio Garcia Bercero, has flown several times to New Delhi since the summer in order to narrow down differences. "We have made good progress over the past few weeks," said De Gucht's spokesperson. This comment contrasts with the pessimism that surrounded the talks until last year. Many experts have argued that India, which has always been keen to protect its market, was not a suitable candidate for a far-reaching FTA. "This will be an ambitious deal, similar to the Korean one. It will cover not only tariffs but also non-tariff trade barriers," said the spokesperson.


However, the most contentious issues - in particular social cohesion - still remain to be solved. The meeting between Singh, Van Rompuy and Commission President Jose Manuel Barroso will aim at finding ways to overcome these obstacles. "We believe that the summit will agree on the shape and the basic parameters of the EU-India free trade agreement," said the German Ambassador to New Delhi, Thomas Matussek. Social cohesion in India - including labour rights and social standards - is seen at the most sensitive stumbling block by both sides. Under pressure at home from political parties and NGOs, the Indian prime minister has promised that the FTA would not imperil the working conditions of Indian workers. The Commission also considers this issue critical since the future deal will have to be scrutinised and ratified by the European Parliament as per the Lisbon Treaty. "We are fully aware that NGOs and MEPs will follow very closely that issue and could in the end block the agreement," said a Commission source.


Another stumbling block that needs to be removed is the conflict over the use of generic drugs. India - along with several NGOs, including Medecins sans frontieres - is wary that the FTA would put in jeopardy its right to produce life-saving generic drugs in order to protect poor Indians. New Delhi decided to take the EU to the WTO last May, requesting the opening of consultations. "When we talk of the intellectual property rights (IPR) chapter in the FTA, there is no question of discussing anything that is beyond our GATT and WTO commitments," said Sharma. He added that with regard to IPR, India was fully compliant with the WTO TRIPS agreement, which allows poor countries to produce generic drugs without paying hefty patent royalties to pharmaceutical firms. "We are investigating whether a solution can be agreed upon by the leaders during the summit," a Commission source said.
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Publication:European Report
Geographic Code:9INDI
Date:Dec 9, 2010

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