- There have been “positive” and “definite” talks in this direction with both the UK and the EU, which are eager to resolve immediate trade and investment-related issues while working towards comprehensive FTAs, two officials said, requesting anonymity.
UPDATED ON FEB 09, 2021 06:36 AM IST
There have been “positive” and “definite” talks in this direction with both the the UK and the EU, which are eager to resolve immediate trade and investment-related issues while working towards comprehensive FTAs, two officials said, requesting anonymity.
There is growing realisation among the stakeholders that investment agreements and an “early harvest” trade package could be easier to pull off than over-arching trade pacts, the negotiations for which usually drag on for years.
India’s investment agreements with most of the 27 members of EU expired during 2017-18, leading to higher costs of investment and some uncertainty among European investors, the diplomats pointed out.
“A clear intent in this direction has emerged after two separate meetings with EU and UK, held by the [Indian] commerce and finance ministers on Friday,” the first official said.
Commerce minister Piyush Goyal met European Commission executive vice-president and trade commissioner Valdis Dombrovskis on Friday, while finance minister Nirmala Sitharaman met her UK counterpart Liz Truss the same day.
India has certain pressing trade issues with the UK and EU, while the two European economies have trade and investment issues with India and these matters can be resolved for mutual gains, the officials said.
“For example, Indian apparel exporters struggle in the UK and European markets because of higher duty, compared to those for Pakistan, Bangladesh and Cambodia. Similarly, the UK and EU have some trade and investment-related issues with India that can be addressed quickly,” the second official said.
The Apparel Export Promotion Council (AEPC) has sought an early solution to the issue of duty disadvantage, the trade body’s spokesperson said. “In a letter to the government, APEC chairman A Sakthivel said India’s apparel export is falling behind several competitors like Bangladesh, Cambodia and Pakistan due to duty disadvantage of 9.6% while exporting to the UK,” he said.
Indian exporters have suggested the government could either initiate discussions for fast-track FTAs or urgently conclude comprehensive economic partnership agreements (CEPAs) with the two major economies, the second official said. Indian exporters are also at a disadvantage because of the continued Generalised System of Preferences (GSP) to 47 least developed countries (LDCs) even after Brexit.
Both officials said that during the first high level virtual dialogue on the proposed India-EU bilateral trade and investment agreement on February 5, Goyal stressed the importance of an “early harvest deal” followed by a time-bound FTA that can serve the interests of both sides and help revive economies in the post-Covid era.
“In a significant step forward, both sides agreed on a monthly progress review of discussions by senior officials and quarterly review by the ministers for providing guidance,” the second official said.
On the European side, there is a keenness to move forward with at least the investment agreement by the time of the India-EU Summit in Portugal on May 8. The diplomats acknowledged that it may be difficult to conclude over-arching free trade agreements in the post-Covid scenario when many countries are focused on increasing self-reliance.
“There should be some forward movement on investment protection and facilitation. It is important to have dialogue and move forward from the standstill we have witnessed since 2013,” a senior diplomat from a EU state said, referring to the breakdown of India-EU trade talks more than seven years ago.
A second diplomat from an EU state expressed understanding for India’s moves to build up domestic manufacturing and other structures but said questions remained about the self-reliance drive. “To address concerns about whether this move is aimed at keeping foreigners out, India must keep engaging and show more pro-activeness,” the second diplomat said.
The diplomats said an investment agreement would address concerns of European investors, who are upbeat on India but are reluctant to pump in funds due to the perceived lack of protection for investments.
Dombrovskis told Goyal that EU-India relations are a top priority, the second official said, adding both leaders agreed to meet within the next three months before the India-EU Summit. “The meeting will serve as a final push for quick deliverables before the meeting of the leaders,” he said.
“The objective is to take forward any of the possible deliverables in the summit, such as launching an investment facilitation mechanism, working on regulatory cooperation, removing trade barriers, deepening research and promoting innovation, addressing multilateral issues of mutual interest, continuing the IPR dialogue and sharing experience in building resilient value chains,” he said.
At the meeting, Goyal also said the COVAX initiative, without a TRIPS waiver, wouldn’t help in ending the pandemic and EU’s support is essential in this crucial endeavour.
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