CUTS Centre for International Trade, Economics & Environment

The European Union’s (EU) reluctance to make its safety and health measures of farm products more friendly to Indian exports and the Union’s efforts to evade discussions on a mutual recognition pact on professional qualifications, have now become major sticking points in the talks on the proposed India-EU free trade agreement (FTA).

Noting that EU’s food safety as well as animal and plant health measures—known as sanitary and phytosanitary or SPS measures in international trade parlance—were acting as non-tariff barriers (NTB) and meant to protect their domestic industry, additional secretary in the commerce ministry Rahul Khullar said, “If there is no movement there, there will be no deal”. He was speaking at a conference on Preferential Trade Agreements organised by CUTS International.

During the visit of EU trade commissioner Peter Mandelson in November last year, commerce and industry minister Kamal Nath had said New Delhi wanted non-trade and extraneous issues like animal welfare and labour to be kept out of talks the India-EU FTA. He had said, “There are NTBs and technical barriers to trade (placed by the EU). We want to ensure that some of the NTBs on packaging on standards are not put in. Even though tariff may be low in the FTA, products may not be exported because of (EU’s) packaging and phytosanitary standards.

The procedures for approval these are things that need to be sorted out.”

On Tuesday, Khullar pointed out that the EU had taken a very long time to ink a mutual recognition agreement (MRA) with Japan and said the EU negotiators seemed averse to MRAs and “are ducking the issue with India”. An MRA is signed for fulfillment of standards or criteria for the authorisation, licensing or certification of services suppliers of the trading partner countries. MRA would result in the trading partners recognising the education or experience obtained, requirements met, or licenses or certifications granted in each other’s country in those service sectors. An MRA with the EU would give a huge boost to the Indian services sector.

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Free trade pact with EU stuck over sanitary issues
Business Standard, January 29, 2008

India has said that issues related to sanitary and phytosanitary (SPS) measures, which are used as preventive tests for pests and diseases in export consignments, must be included in the negotiations of the free trade agreement (FTA) being negotiated with the European Union (EU).

“There has been very little movement on SPA measures. It is big problem in the EU. If there is no movement on SPS measures, there will be no deal,” said Rahul Khullar, additional secretary, department of commerce, at a seminar organized by by Consumer Unity & Trust Society (CUTS) International.

According to trade experts, the EU has been a major user of SPS measures. “The United States has taken the EU to the dispute settlement board of the WTO several times over SPS issues,” said Pradeep Mehta, Director General, CUTS.

Last year, during the visit of European Trade Commissioner Peter Mandelson to India, Commerce Minister Kamal Nath had stressed that non-tariff barriers should not bother Indian exporters to the European Union once the FTA was inked. Nath had expressed concern that after the FTA was signed, Indian exporters may face difficulty in meeting SPS standards in the EU, which in turn would prevent export growth from India.

Khullar also said that the provisions related to government procurement could not be included by India in the FTA negotiation. “There are constitutional issues, especially regarded to state level procurement,”

The India-EU FTA, seek to cover not only goods, but also services and investments. However, Khullar said that European Union was adverse to mutual recognisition agreements (MRAs), which are needed to recognize professional degrees of both the sides.

“It took almost eight years for EU to finalise one MRAs with Japan.

Both the sides have completed three rounds of talks till now while the fourth rounds of talks till now while the fourth round is scheduled by the end of February.

Talks on India-EU trade pact hit roadblocks
Press Trust of India, January 29, 2008

New Delhi: Negotiations for a trade agreement between India and EU, which was put on fast track in November last, has hit roadblocks on the issue of government procurement.

While India is willing to agree for a transparency clause in the proposed agreement, it does not want to commit on government procurement, Additional Secretary in the Commerce Ministry Rahul Khullar said here today. "They (EU) also want to place on the agenda transparency which is okay and government procurement which is not so okay," he said at a CUTS seminar on Preferential Trade Agreements and India .

Non-trade barriers are another area of discord between the two sides. India wants that Sanitary and Phyto-Sanitary (SPS) measures should not be used to block trade. But the EU does not seem to be agreeing with India s contention, he said. "SPS measures are essentially in place to protect trade because tariffs have ceased to be relevant. Those are precisely the areas where there is very little movement and if there is no movement there will be no deal," Khullar said.

India and EU had agreed at their annual summit in New Delhi last year to put the market-enhancing Trade and Investment Agreement on a fast track with a deadline of December 31, 2008 for completion of negotiations.

Describing the talks on a bilateral trade deal as "the most challenging", Khullar said the agreement also has to be in conformity with the rules of multilateral regime under the World Trade Organisation. He said there were legal complications derived from WTO commitments in Geneva. The two sides have to reconcile what they "can do in Geneva and what they cannot".

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