Shun Diplomatic Opacity

According to the Joint Statement there is substantial progress achieved across the board on different areas and that 'Commerce, Industry and Textile Minister, Shri Anand Sharma and European Trade Commissioner, Mr. Karel De Gucht would monitor the progress of these negotiations for an early conclusion'.

However, every one is not happy with the speedy conclusion of FTA with EU. Both political parties including BJP and CPI (M) and business associations like Society of Indian Automobile Manufactures (SIAM) came out openly against the content and process of FTA.

The EU-India FTA falls within the new generation FTAs which covers issues investment, competition policy and government procurement, which are currently outside the regulation of World Trade Organisation (WTO) along with other more common issues. This broad nature of FTA itself is a matter of worry because it eliminates or reduces the policy space for governments to shape economic policies. Further, the immediate enhancement of access to EU market is not expected for Indian exporters due to the ongoing Euro Zone crisis. As a result of the crisis, the EU Members are implementing austerity measures and thus, the FTA might benefit the EU industries more than the Indian ones.

However the moot question is, should India sign away its development policy space for gains in few sectors. Critics also point out that movement of professionals would not work out on the expected lines because visa requirements within EU still fall under the domain of internal security of each Member State. Therefore, the movement of professionals can be blocked by stringent visa requirements.

EU has been aggressively demanding market access through tariff cuts, opening up of FDI in sectors like multi brand retail, opening up of government procurement, etc while maintaining the monopoly of their companies by imposing high standards for the protection and enforcement of intellectual property rights (IPR). EU also wants India to reduce tariff on cars from 60% to 50% and eliminate tariffs on auto parts. If agreed, experts think that such demands would undermine India's efforts to become a world leader in the industry.

Further, there are serious concerns on EU's demands related to the opening up of the government procurement, a traditional tool to provide incentives to domestic industry, especially in the initial stages. Such policies would not be compatible with EU demands of opening up of the government procurement to EU companies.

EU demands on IPRs are equally problematic and would affect access to medicines, access to knowledge and access to agrochemicals. EU demands proprietary rights on the clinical trial data of medicines and agro chemicals (data exclusivity). If granted, data exclusivity would prevent the introduction of the medicines or agrochemicals for11 years without conducting fresh clinical trials,

reducing competition and compromising access to medicines and agro-chemical at

affordable prices.

Most important worry comes from India's experience on FTAs concluded so far. Except three FTAs viz. Singapore, Sri Lanka and SAFTA, India has trade deficit with all other FTA partners viz. South Korea, Thailand, Malaysia, and Japan. FTA may increase the already present trade deficit with EU further.

Troublingly, except a few people, no one is aware of the details. The Joint Report by the Indian Commerce Minister and his counterpart, which is supposed to spell out the details, is not a public document. There is no systematic consultation with the state governments. Similarly the Parliament is also kept uninformed about the details of FTA.

On the contrary, EU's negotiating mandate is coming from its parliament. Further, the parliament is informed periodically about the progress of negotiation. Moreover, EU parliamentary ratification is required to implement FTA. Hence, it is high time for the Indian political leadership to bring transparency and accountability on its FTA negotiations especially FTA with EU, which has far reaching implications on India's future development.

 

(The views expressed by the author are personal.)