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Globalisation and the increasing liberalisation of the world economy have prompted countries to look to a more liberalised trade regime. Slow progress in developing a workable and flexible trade mechanism under the aegis of the World Trade Organisation (WTO) has led many countries to opt for bilateral and regional Free Trade Agreements (FTAs). Liberalising market access is a prime focus of FTAs. FTAs are in place in the North, and the European Union has also forged agreements with developing countries in the South.
The nature and scope of such FTAs and the trade benefits that accrue under them are not essentially homogeneous. Although more Foreign Direct Investment (FDI) in developing countries has been projected as a key benefit of FTAs, there are concerns on issues relating to erosion of special and differential treatment to developing countries, investment, competition policy, government procurement, intellectual property rights and issues relating to incorporation of labour and environmental standards.
Currently, negotiations for an India-EU FTA are going on.
The European Union is India's largest trading partner. The conference 'Exploring New Regionalism: The EU, India and Beyond' was an attempt to understand and identify the potential benefits and areas of concern in FTAs with an Indo-EU focus. It also aimed to facilitate a more informed negotiating posture for developing countries by inviting other developing and underdeveloped regions to share their experiences and concerns.
The conference was held from October 30 to November 1, 2007, New Delhi. Policymakers, academics, representatives from the business world and civil society organisations from Asia, Africa and Europe attended the two day conference followed by civil society workshop on the third day. The deliberations were spread over four sessions each day. Each session was chaired by an eminent expert and was followed by open discussions.
Transcript of the Conference
Day 1: Inaugural Session
Kasturi Das, Research Officer at Centad, explained that the conference aimed to bring participants from the EU, the ACP (Africa, Caribbean and Pacific), Association of South East Asian Nations (ASEAN), and South Korea and India on the same platform; to introspect on the EU's engagements in FTAs; to analyse issues and concerns of countries/regions from the ACP and Asia about their respective agreements with the EU; to assess the current state of negotiations of FTAs and to explore potential areas of civil society interventions so as to embed development concerns in the FTA deliberations and ensure transparency in the negotiations.
R S Ratna, Director, Regional and Multilateral Trade Relations, Ministry of Commerce and Industry, Government of India, explained the current state of negotiations in the India-EU FTA. Ratna said that trade liberalisation is widely recognised as the cornerstone of economic development and growth, and ultimately, poverty reduction. FTAs are viewed as the second best instrument for trade liberalisation. In FTAs, the talk is not about eliminating tariff rates, but of reducing applied tariff rates. He said Regional Trade Agreements (RTAs) are useful instruments to develop trade partners. RTAs should not be used as a tool to bypass or subvert the multilateral trading system and force implementation of issues which are of concern to developing countries. They should be building blocks towards a broader objective, and should complement the overall multilateral trading system. Liberalisation under SAARC gave some sort of confidence to Indian industry, and India has gone ahead with autonomous liberalisation in most of the goods traded.
Antonio De Leon Salvador, Attorney, Initiatives for Dialogue and Empowerment through Alternative Legal Services (IDEALS) Inc, Philippines , spoke on 'ASEAN-EU FTA- Current State of Negotiations'. Concluding FTAs with ASEAN and the EU, he said, was driven by business. It is estimated that the FTA would increase the EU exports by 24.2% while the ASEAN exports by 18.5%. I t was the need for additional markets for products that drove FTAs. The EU has comparative advantages being the biggest exporter and investor in the world. The EU has been a custom union, has clear working institutions mechanism for trade policy formulation, trade negotiations, trade remedy access. There is a committee of international trade in the EU parliament responsible for matters relating to establishment and implementation of the Union 's common commercial policy and external economic relations. On the other hand, ASEAN's policy is decided by trade ministers, department heads and secretaries whose primary job is to mange their departments and not to negotiate trade polices. Thus FTAs require a different kind of engagement between governments. He questioned the legality of FTAs in the Philippines , and termed the Japan- Philippines FTA as lacking mass support.
Jane S Nalunga, Country Director, Southern and Eastern African Trade Information and Negotiations Institute (SEATINI), Uganda, made a presentation on the 'EU-ACP EPAs: Current State of Negotiations' and explained the current state of various trade negotiations in the ACP, ESA (Eastern and Southern Africa), SADC (Southern African Development Community), ECOWAS (Economic Community of Western African States), and CARIFORUM (Forum of the Caribbean ACP states).
In the Lome Conventions, which has been the framework for ACP-EU cooperation since 1975, the performance was largely unsatisfactory. The share of ACP exports to the EU fell from 8% in 1975 to 2.8% in 2000; Africa was the only region where poverty increased, while others experienced a decline; and intra-African trade remained low at 10% of total trade. A re-assessment in 1998 led to the signing of the Cotonou Agreement in 2000 for setting up reciprocal Economic Partnership Agreements (EPAs) between the ACP countries and the EU. It had a stated objective: to ensure the sustainable development of ACP countries, their smooth and gradual integration into the global economy, and the eradication of poverty. However, no meaningful discussion on the development agenda has yet taken place. With regard to the EPA status, the negotiations are slated to be concluded by December 2007. They are taking place at the all-ACP level and at the regional level in six groups (geographical configurations) - ESA, SADC, ECOWAS, CEMAC (Economic and Monetary Community of Central Africa), Pacific, and CARIFORUM. A new arrangement is to come into effect on January 1, 2008.
Floor discussion
Questions were raised on whether exclusion should be done based on products, on volume, or quality. It was felt that all these thresholds should be applied. To a question on whether the Indian government does a cost-benefit analysis of all trade agreements, Ratna answered that an impact assessment is done. Given the high rate of duties in India, there would be revenue loss. In total, there would be a gain in services and investment flow from the EU, eg, India signed an FTA with Singapore which has zero duties, and despite this, India's exports are high.
Session 2: EU FTAs: Processes, Issues and Concerns
B S Chimni, Professor and Chairperson, Centre for International Legal Studies, School of International Studies, Jawaharlal Nehru University, India, who chaired the session said that developing countries could not ignore FTAs. He raised various questions: whether countries have bargaining power with the EU, whether they can resist the use of the FTA process to match with the required standards in different areas of free trade or a WTO plus regime. There is a need to evolve special and differential treatment mechanisms to safeguard the gains within the WTO. India needs to prioritise areas in the service sector, which needs to be opened up, and also on regulatory mechanisms for the same.
He concluded by saying that FTAs are a means to an end, to be utilised for maximising gains in trade. The advantages of trade at present are not distributed equally, he said. The broader debate was if free trade is still sustainable. Civil society and subaltern groups have been trying to adjust with the complexities of free trade. What is most important is that the advantages accruing from these agreements must be equally distributed.
Addressing the conference, chief guest Anwarul Hoda, Member, Planning Commission, Government of India, said that the 'new regionalism' is inevitable. The motivation behind the formation of some regional blocs like EU, ASEAN, and MERCOSUR is geopolitical. In the case of the EU-India FTA, the driving factor is economic advantages. It was necessary to maximise trade and thus a comprehensive agreement was required since that would be advantageous, especially for large economies like the EU and India..Exclusions and exemptions, Hoda said, become necessary in order to meet the demands of the domestic industry. They are also important for agricultural goods. However, there is difficulty in imposing countervailing duties in agricultural products. The India-EU FTA would benefit the tourism sector, including medical tourism. Not being a political agreement, it is important to look at the economic benefits of the proposed FTA.
Marc Maes, Trade Policy Officer, Coalition of the Flemish North-South Movement, spoke on 'The EU's approach to FTAs and processes followed by the EU'. There are different motivations for EU FTAs, but economic and political stability is the most prominent. Negotiating an FTA with Mexico, for example, was impelled by the EU's competition with the US. EU negotiations were earlier exclusively on goods, excluding agriculture. But over the years, the bilateral trade agenda of the EU has become broader. There is lack of transparency in trade negotiations with regard to EU FTAs, Maes said. FTAs lead to market openings for European investors and enforcement of intellectual property rights. It is feared that FTAs will get rid of all barriers in trade, resulting in more trade conflicts. To avoid trade conflicts, it is important to develop appropriate inventories of all possible trade barriers, and also to see that agreements are implemented.
Antonio De Leon Salvador, Attorney, Initiatives for Dialogue and Empowerment through Alternative Legal Services (IDEALS) Inc, Philippines, spoke on the 'ASEAN-EU FTA: Issues and Concerns for ASEAN'. The proposed ASEAN-EU FTA has far-reaching consequences for the Philippines where it will have a significant impact on property rights. Also, ASEAN industries are likely to suffer. Domestically, there is a fear that unemployment will rise as a result of the FTA. The ongoing negotiations have also brought the concerns of health workers to the fore. Health workers in the Philippines are worried that they will lose their current status as 'health workers' and be just 'workers'. Reduction in tariffs will have a substantial impact on revenues of ASEAN countries, Salvador said.
Anuradha R V, Partner, Clarus Law Associates, India , spoke on the 'India-EU FTA: Issues and Concerns for India '. Key issues for India include the removal of "other trade barriers" and Modes 1, 2 and 4 in all service sectors. India needs to focus on the hidden barriers to trade that Indian exporters end up facing. Indian exporters must have the internal capacity to meet key international standards. Lack of transparency and harmonisation within the EU are important issues. This has prevented India from exporting services to different countries within the EU. Language requirements in notification of member countries are also a key barrier. She said there should not be any barriers to the entry of professionals, especially on a temporary basis. Local regulations and price regulations are also key barriers.
Aehwa Kim, Chair, Special Committee for the Korea Alliance against Korea US/EU FTA, South Korea, presented 'South Korea-EU FTA- Issues Concerns and Experiences'. Korea is the EU's fourth largest trading partner outside Europe, and the EU is Korea's largest export market after the US. Since the late-1990s, Korea has had a trade surplus with the EU. The Korean government wants to push the FTA with the EU because it will increase Korea 's GDP from 2% to 3% and create 300,000 more jobs. Since the EU includes 27 countries of varying economic size, from advanced countries to developing ones, a deal with it will probably offer more business opportunities. In addition, the simultaneous pursuit of the Korea-EU and Korea-US FTAs is a tactic to ease the anti-FTA sentiment among the general public towards the Korea-US FTA, by presenting FTAs as inevitable steps to economic development. The main concerns of the South Korea-EU FTA, Aehwa Kim said, is that the EU wants to put the emphasis on the well-known Singapore Issues: investment, competition, government procurement and non-trade barriers. The EU will not accept anything less than what Korea has already agreed in the US-Korea FTA. For its part, Korea wants to put the focus on the automobile and manufactured goods sector.
Sophie Powell, Trade Policy Adviser, Traidcraft, UK, presented 'ACP-EU EPAs- Issues, Concerns and Experiences'. The ACP-EU FTA is essentially between unequal partners, she said. Elimination of tariffs on most items will have significant impact on sectors important for food security, livelihoods, future industrial development and regional markets, especially in a context where EU exports of food and agriculture to the ACP region grew by 39% from 1999 to 2006. According to sources from the Kenyan Ministry of Trade, 65% of Kenya's industries are vulnerable to unfair competition with the EU. The EC's own Sustainability Impact Assessment (SIA) predicted EPAs (Economic Partnership Agreements) could spell the end of the West African manufacturing sector. The United Nations predicts that countries will have difficulties fostering comparative advantages (for example, case studies on Ethiopia and Rwanda predict entrenchment of commodity dependency with EPAs).In addition to undermining the regional market, the EPA process undermines regional processes towards economic integration in other ways. She recommended a fundamental rethink of ACP-EU trade relations. In the short-term, ACP could employ tactics such as calling for more impact assessments and more multi-stakeholder scrutiny (including from parliament) as a precursor to concluding any agreement. Calling for the European Commission to fulfil its obligations in Cotonou to provide an alternative solution that is no less favourable would help ACP countries.
Floor discussion
There was a consensus on the fact that adjustment costs need more emphasis. Also, there is a need for effective market access. I t was also asked how we can safeguard the Special and Preferential Treatment especially for LDCs (least developed countries). Professor Chimni answered that the consensus that has emerged is that SPT is not evolved. It is best for developing countries to integrate it into the WTO.
Session 3: Services and Investment
Rupa Chanda, Professor, Indian Institute of Management, Bangalore, who chaired the session, said that in the Indo-EU FTA services is an important issue interrelated with investment issues, outsourcing issues, and geopolitical interests. Europe is a big market for export in services. There is a complimentarity of interests involved in the FTA. The EU's interest in India is mainly in Mode 3. India's interests are in Mode 1 and Mode 4. The EU wants removal of discretionary granting of market access to investors, flexibility in setting up a commercial presence, streamlining of investment processes, greater transparency in procedures, stability, predictability and clarity, increasing foreign equity, opening of key services like legal, accountancy and retail. An issue raised by the IT sector is that the existing paradigm does not address the new trend in the movement of people. New visa rules for professionals are required. It is also important to look at labour issues. There are difficult sectors and modes on both sides and there are a lot of trade-offs in the whole process. The EU will push for more liberalisation, more complimentarity, transparency, especially in investments. India should bind in market access in Modes 1,4 and 3, she recommended.
Suparna Karmakar, Senior Fellow, ICRIER, India, presented a paper on 'Domestic Regulations vs Market Access in EU: Issues and Concerns'. Trade in services is an important part of the Indian growth and development story, Karmakar said, and India's interests here are offensive. The EU is more defensive as services are not yet under a single market The production and market structure of many services is not conducive to trade. In the Mode 4 Trade and Regulatory Issues, domestic regulation (DR) is a barrier to effective market access for high-skill service providers from developing countries. Regulations relating to visa requirements and work permits - economic needs, tests, numerical quotas and duration/time limits for stay; discriminatory policies favouring domestic service providers - and especially requirements relating to citizenship and residency (even for sitting examinations), and linkages with commercial presence requirements, non-recognition of professional qualifications and experience, etc, are issues of concern for market access in services. The issue of transparency involves inadequate information, or information not readily available. There is the need for harmonisation of technical standards, intellectual property regime, and data privacy concerns (transmission of EU data to third countries only if those countries are deemed to provide 'adequate' levels of protection under domestic law). Although the EU could offer more market access, India cannot really access them in member countries because of regulatory issues.
Davie Malungisa, Associate and Director, Trade Law Centre for South Africa (TRALAC), presented a paper on 'ACP-EU EPAs: Services Issues and Concerns for ACP'. SADC-EPA is one of the six ACP regions. SADC trade in services is growing faster than in goods. The European Commission (EC) wants EPAs to include services and regulatory supply-side commitments (investment, competition and public procurement). SADC is opposed to liberalisation of services as part of the EPA Developing Services Protocol. SADC needs domestic legal, administrative and regulatory capacities before liberalisation. Developing service sectors have to compete with high-resource European companies on an equal footing. The consequence of the divergent position and stand-off between South Africa and the EC has reduced the SADC-EPA to a bilateral issue. The EC is bringing in issues categorically rejected at the WTO, through the back door. SADC countries are being forced to negotiate issues that go beyond the multilateral agenda. SADC is about to realise its own FTA beginning January 2008. There is a need for a harmonised services liberalisation approach before the EPA. Negotiations must be informed by the inclusion of non-State actors such as NGOs and the private sector.
Sania Reid Smith, Research Consultant, Third World Network (TWN), Malaysia, presented a paper on 'ASEAN-EU FTA: Defensive and Offensive Interests'. The EC is asking for the opening up of sectors such as energy, environmental services, construction, computer-related services, telecommunications, architectural and engineering services, financial services, maritime transport, legal services, postal and courier services, and air transport services. ASEAN members may be concerned about provisions that restrict their ability to prevent or control financial crises. Some ASEAN members may want the EU to open its labour market. However, for this to be effective, ASEAN workers also need visas and recognition of their qualifications.
Floor discussion
How business pushes the agenda, the issue of domestic regulation in India , and whether we have a clear strategy to proceed in trade negotiations were some of the significant questions that came up. Rupa Chanda said India needs to do a lot of ground work. Private initiatives seem to be working better. However, there is no clear strategy. Industry self-regulation is important along with an independent regulator.
Session 4: Goods (Part 1)
Manab Majumdar, Director and Team Leader, WTO, FTA and Foreign Trade Division, Federation of Indian Chambers of Commerce and Industry (FICCI), India, chaired the session. The trend of building up a long negative list and sensitive list, which was usually followed in negotiations on trade, was not really followed in the India-EU FTA negotiations, he said. India has some defensive interests in items like wine and beverages, processed food, paper, low-end machinery, appliances, etc. It is useful to look into India 's sensitivities in furniture and carpets. India 's share of EU imports has increased from 1.5% to 1.7% in the last four years. India has to maintain its competitive interests. Tariff peaks exist in fish and fish products, etc, which is another area of offensive interest. India 's share of extra EU imports has come down in textiles and clothing. Wherever possible, India should, through an FTA try to secure its interests.
Abhijit Das, Deputy Project Coordinator/Officer in Charge, UNCTAD, India, presented a paper on 'India-EU FTA: Products of Concern'. In the existing trade pattern between the EU and India , the EC provides a substantial market for India's exports though the balance of trade has always been in its favour. India's top five exports to the EC for the year 2006-07 were mainly textiles and clothing, mineral fuels and mineral oils, gems and jewellery, iron and steel, and organic chemicals. India 's top five imports from the EC for the same year consisted mainly of machinery and mechanical appliances, gems and jewellery, electrical machinery and parts, iron and steel, and optical and medical instruments. He said that economic analysis and stakeholders' feedback at seven consultation meetings in different regions of India , and written feedback, were undertaken to prepare a recommended exclusion list. If downstream products belonged to a small-scale and fragmented domestic industry, an attempt was made to exclude them from the sensitive list. This was done to keep the cost of production in Small-Scale Industries (SSIs) relatively low. The recommended exclusion list comprises 401 tariff lines, which consists of 148 tariff lines in agriculture and 253 tariff lines in the non-agriculture sector. The recommended low priority exclusion list comprises 320 tariff lines for non-agricultural products on which duties may not be eliminated but could be reduced to a level of 5% on a preferential basis.
Bibin Menon, Joint Director General of Foreign Trade, Ministry of Commerce and Industry, India, presented a paper on the 'Offensive Interests of India in Industrial Goods'. Till now, India has not entered into a comprehensive FTA. It is important to concentrate on the goods sector for more market access. He focused on the possible criteria of peak tariffs in the EC, a tariff line analysis and non-tariff barriers of the EC. Peak tariffs exist in the EU in a list of products under marine, footwear, electrical/electronics, transport vehicles, etc. They also exist in product categories of edible fruits and nuts, preserved food and processed fruits, etc. The EC has a complex tariff structure in agriculture. Especially in marine products NTBs create difficulty in market access to the EU. Non-tariff barriers exist in marine products, chemicals, herbal medicines, pharmaceuticals, cotton fabrics, heavy metals, engineering goods and equipment such as motors, generators, and engines.
Floor discussion
A question was raised on the issue of EC tariffs. The concern was about a situation where domestic prices are cheaper than international prices. Bibin Menon replied that primary products are sensitive and are important. He said Non-Tariff Barriers (NTBs) are the real problem. Abhijit Das said institutional reforms are required to safeguard trade gains. He added that tariffs and subsidies are sometimes essential to protect domestic industry and also the interests of consumers. Reforms and institutional mechanisms in agricultural goods need to be developed for maximum trade gains to farmers.
Session 5: Goods (Part II)
Abhijit Das, Deputy Project Coordinator/Officer in Charge, UNCTAD, India, chaired the session and gave a brief outline of the focus areas of this session. It was hoped that certain common concerns would span across developing and developed countries' FTA which would provide pointers to civil society to seek to protect important stakeholders' group.
Aehwa Kim, Chair, Special Committee for the Korea Alliance against KorUS /EU FTA, South Korea, presented a paper on 'South Korea-EU FTA: Offensive and Defensive Interests of South Korea in Goods'. The Korean administration predicts that an FTA with the EU would boost bilateral trade by as much as 40% in the long run, and the South Korea-EU FTA would diversify the country's export market. There is no economic validity for an FTA with the EU in a situation where the trade surplus with the EU is increasing, Aehwa Kim said. Since both tariff and non-tariff barriers are not high, there is no need for an FTA. Korea's agricultural products cannot compete with the EU because of the EU's protective system based on tariffs and subsidies. In non-tariff barriers, technical standards for the auto industry were another disputed issue in the latest FTA talks. The provision for Rules of Origin, which speaks about the regional value of content in the products produced, is also detrimental to Korean interests. Korea uses large proportions of content produced in other countries in their products.
Tim Rice, Trade Policy Officer, ActionAid, UK , presented a paper on 'EU-FTAs: Issues and Concerns in Agriculture'. The EU's FTAs are governed by the general principle of GATT (General Agreement on Tariffs and Trade), which includes 'substantially all trade', and the EU wants elimination of all tariffs on 90% of goods within 10 years. The EU is concerned about its agriculture sector, and is looking to defend its interests in the same. The India-EU FTA will target high import tariffs (in India) and export tariffs in agriculture. In EU FTAs, Rice said, agriculture falls under 'free movement of goods' and it covers both import and export tariffs, non-tariff barriers and trade defence instruments. Transition periods were available in previous FTAs, especially in the EU-South Africa, EU-Mexico and EU-Chile FTAs. Previous FTAs were silent on EU agricultural export subsidies. The EU's offensive agenda in agriculture is marked by high import tariffs on food preparations, especially wines and spirits, garlic, raisins, tea, coffee as well as vegetable fats and oils. In EU FTAs there are negative implications for government revenues, employment, food security, and the environment.
Linu Mathew Philip, Research Officer, Centad, in 'Sensitivities in Agriculture and the Need for Building Trade Safety Systems in Developing Countries', said that sensitivities in agriculture should be addressed after looking at the Indian scenario. The population dependent on agriculture is very high in India and the income accruing from agriculture is very low. There is great diversity in agriculture due to the country's geographical features. Sensitivity does not serve development. Reduction of applied duties will have implications on flexibility and multilateral position at the WTO and is likely to jeopardise India's WTO position. Although there are provisions for safeguards, there is no clarity on the extent to which they can be applied. Three key points of Philip's presentation were: the current mandate on the Indo-EU FTA should not jeopardise the development position at the WTO; development content needs to get embedded in the negotiation through effective instruments; and an agricultural safety system should be made a necessary pre-condition in any FTA.
Floor discussion
There was a question on the control of prices in the domestic market. Institutional mechanisms are suggested to maintain the same. It was pointed that is not possible to depend entirely on trade in agriculture for food security. An explanation about dual pricing of natural resources was also raised. Abhijit Das said dual pricing is prevalent in natural products like petroleum. This is done to make natural resources available to domestic consumers at a reasonable price.
Session 6: IPR, Competition Policy and Government Procurement
Biswajit Dhar, Professor and Head, Centre for WTO Studies, Indian Institute of Foreign Trade (IIFT), India, chaired the session.
Kasturi Das, Research Officer, Centad, spoke on 'India-EU FTA: Issues on Geographical Indications (GI)'. TRIPS provisions on GIs, he said, exist for most products, especially wines and spirits. Article 23 of TRIPS provides for general protection. There is no legal or logical basis for exclusive protection for all products. Australia and the US do not want such kinds of stringent protection. They have the concept of 'prior rights' and 'acquired rights'. There are conflicts, but there is a compromise under Article 24 giving some exemptions. The agenda of the EU on GI includes: a multilateral register for wines and spirits, extension of GI for all products, and removal of exemptions granted under Article 24. India also supports higher protection for all product categories. Eighty per cent of EU spirits use GI. India has much offensive interests in the area of GI. Unlike the EU, India does not have many products in the GI category for food, beverages, etc. Indian GI is in handlooms and handicrafts. India has kept a high protection for GI. It is very important to keep options open for GI to protect products for automatic GI recognition.
Sanya Reid Smith, Research Consultant, Third World Network (TWN), Malaysia , speaking on 'Traditional Knowledge and Biodiversity', said most Asian countries are rich in biodiversity and traditional knowledge. TRIPS does not require patenting of plants and animals, but there is a WTO proposal to amend TRIPS to cover issues related to protection of traditional knowledge of biodiversity and the rights of its holders. International, legally binding instruments are required for the benefit of all countries. European countries are likely to push for patent cooperation. Some EU FTAs appear to prohibit export quotas, duties and licences (for example, the EU-Chile FTA).
K M Gopakumar, Research Officer, Centad, India, speaking on 'Other IPR Related Concerns in EU FTAs', said IPRs are often part of controversies in bilateral negotiations and FTAs. The EU will attempt harmonisation of IPR in FTAs. The EU is evolving strategies to enforce IP in member countries and is open to public-private partnership in IP enforcement. EU FTAs can generally be classified into 'old generation' FTAs and 'new generation' FTAs. New generation FTAs focus on innovation and intellectual property. Its standards are: copyright and related rights; trademarks; GI; industrial designs; patents; plant varieties; genetic resources; and Traditional Knowledge (TK). There is no protection of data per se in India, though the IT industry will push for more data protection. Implementing IP issues is an important area of concern. Infringement suits and rights of representation are focus areas. The party that loses the case will have to bear the cost of litigation. This includes the poor. This is a very serious issue. Harmonisation will have a serious impact on other multilateral negotiations.
Nitya Nanda, Fellow, Centre for Global Agreements, Legislation and Trade, TERI, India, spoke on 'Competition Policy in EU FTAs'. The competition rule should be there, and has been the accepted norm in all multilateral agreements. There are different stages of development in this regard in the EU. India, too, has a competition law. The EU also wants to incorporate competition rules. The content of competition law is not uniform as it depends on the domestic laws of the participating countries. Many developing countries do not have a competition law. India's competition law provides for equality before the law. Competition law is not only juridical but administrative too. The government has considerable say in competition law. Issues in competition provisions include: substantive provisions in the competition law, non-discrimination, state aid, mutual recognition of legislation, cooperation and consultation, and state enterprise. The public interest, economic development considerations and policy directives of the government are specific problem areas. There are some concerns such as lack of resources with the competition authority. The competition provisions in existing FTAs have rarely been used. Whether they will be useful or not has to be explored.
Rashmi Banga, Economist, UNCTAD, India, presented a paper on 'Government Procurement in EU FTAs'. In a government procurement agreement, whatever the government of a member country procures, all the members have equal right to bid for tenders. Only a few bilateral agreements include government procurement. However, more and more countries are trying to include government procurement agreements in FTAs. The benefits of government procurement are that it leads to a transparent regime, access to foreign markets, better products, lower costs, etc. Whether developing countries will be able to get into government procurement in developed countries is an issue. Government procurement is a development tool. Administrative costs will be high since all procurements need to be notified. There are social costs too. A lot of research is required to identify barriers to government procurement. Threshold levels in GPAs can be negotiated. Offsets for domestic content can also be negotiated (for example, in Israel).
Floor discussion
An important question that arose was on facilitation procedures required for more GI for India. Kasturi Das answered that there is no North-South divide in GI. It is based purely on the commercial interests. India does not have that much commercial interest in terms of GI in EU countries. Gopakumar said it is not a question of numbers regarding GI; it is more about building a brand.
Session 7: Regulations and Standards
Atul Kaushik, Former First Secretary, Permanent Mission of India to the WTO, India, presented a paper on 'Environmental Issues in EU FTAs'. Regulations impact the market being accessed. It becomes relevant to the environment. India and the EU are members of most of the Multilateral Environmental Agreements (MEAs) and are committed to serving the objectives of sustainable development. When India is negotiating with the EU, it is negotiating with the most environmentally conscious countries of the world. Common but differentiated responsibilities must be negotiated. It is important to come to a platform where all are equally benefited. India has four agreements now, and environment is mentioned only in one - the Cooperation Agreement. It refers to certain actions that the EU undertakes in India to protect the environment. These are thus capacity-building measures. One important issue relevant from the environment point of view in the EPA negotiation is that the Commission has been mandated to conduct a sustainability impact assessment of any ongoing negotiations. But its report does not say anything about the environment. India needs to watch for certain important issues in the ongoing negotiations. Tourism can be an example where environment will be an issue. Standards of absorbing capacity in India and the EU are different. It is important to look at problems from an Indian point of view.
Chanchal Sarkar, Deputy Director, Ministry of Commerce and Industry, India, presented a paper on 'SPS/TBT Issues and Concerns of India'. The real barriers to trade are NTBs: Sanitary and Phytosanitary measures (SPS) and TBTs. Non-harmonisation of standards in EU member countries is acting as a trade barrier. SPS measures deal with additives in food or drink; contaminants in food or drink; poisonous substances in food or drink; residues of veterinary drugs or pesticides in food or drink; certification: food safety, animal or plant health, etc. There is a clear indication that exporting communities face problems with regard to SPS and TBTs, yet SPS and TBTs are important. The India-EU FTA makes exports easier. It helps to simplify procedures and reduce transaction costs for complying with regulations/standards. India needs to develop appropriate standards to enter into FTAs, take part in international standard-setting bodies, and ensure transfer of technology appropriately. Problems faced include awareness, financial and infrastructural bottlenecks, administrative and institutional bottlenecks, inadequate domestic reforms and coordinated approach, inadequate manpower, lack of appropriate training and coordination. Most of the issues with respect to objective on SPS/TBT are yet to be settled and the framework agreement on SPS and TBT is yet to be decided. It is important to set up a permanent mechanism for cooperation and resolution of SPS/TBT-related issues.
Navin Chandra, Senior Fellow, Institute of Human Development (IHD), India, presented a paper on 'Labour Standard Concerns in EU FTAs'. The debate on labour law emerged in the context of the Washington Consensus -- Globalisation, Liberalisation and Privatisation. India came on the scene later. The debate is based on the theory that labour itself is competitive. But all markets cannot be at equilibrium simultaneously. There are always imperfections in the market. Labour protection does not affect growth. There are also problems in Indian labour laws. Implementation of the law is inversely proportional to its volume. Labour law in India is voluminous and complicated. The dignity of labour needs to be enshrined in the law. Simplification, consolidation and codification of labour laws are required for greater compliance.
Floor discussion
An important question was raised on pollution absorption capacities of India and the EU. It was stated that capacities for India and the EU are different. Though India has more pollution absorbing capacity, we have to negotiate from a point of strength, capitalising on our absorption capacity. Another question was on labour issues in FTAs. The answer was that effective implementation of labour laws is required. There cannot be uncertainties.
Session 8: Rules of Origin and Trade Facilitation
R S Ratna, Director, Regional and Multilateral Trade Relations, Ministry of Commerce and Industry, India, chaired the session.
R K S Bhatia, Executive Director, Ace Global Pvt Ltd, India, presented a paper on 'Trade Facilitation Concerns in the EU'. He explained the important finding of an UNCTAD and Ministry of Commerce (India) study that showed that specific trade facilitation problems are faced in key destinations in the EU. There are some sector/enterprise scale-specific issues (SMEs). Respondents reported problems at destinations in the EU, Middle East (losses), and US (security clearances). Food products, handicrafts and unconventional exports are the key problem areas. Inadequate knowledge of regulations, procedures, lack of clarity in process descriptions for detention, lack of confirmatory procedures and appeal, use of discretionary and arbitrary actions in disposal, high costs of complying with security initiatives, etc, are major issues of concern. It was also observed that trade facilitation inside India is a bigger problem than outside India. In the EU, the key problems faced are excessive requirements, increasing amount of legislation, lack of harmonisation of procedures among member states, absence of consultative/appeal mechanisms, and unclear/discretionary procedures for detention and disposal. Contrary to expectations, costs/risks are lower for smaller enterprises. Larger operators, being part of global chains, face more compliance-related costs. Problems in trade facilitation include coming up of new issues every time, environmental regulations and EU security initiatives.
C Satapathy, Member, Customs, Excise and Service Tax Appellate Tribunal, India, presented 'Rules of Origin in EU FTAs'. The Indo-EU FTA is important because India is negotiating with one of its most important trading partners. There are significant issues to be addressed. These include enabling the EU to harmonise, simplification of Rules of Origin (RoO), removal of the antidumping clause, and removal of ad valorem rules. Harmonisation of laws within EU member countries will help save costs for Indian exporters.
The EU has been using the antidumping clause as a protectionist measure and India needs to curb the inclusion of the antidumping clause in the negotiations, Satapathy said. Regarding RoO, it is the duty of the commerce ministry and not the customs department to frame certification procedures. India should form a Central Trade Facilitation Authority that can facilitate dissemination of customs-related information. RoO should be scientifically designed. Value-addition has to be scientifically determined. It should involve substantial transformation. There should not be discrimination in terms of value-addition.
Floor Discussion
I t was felt that small enterprises have no problem as buyer approves the product and handles the documentation. However, if they can directly export rather than approaching big exporters, they can get a better price realization. Other questions were on issues related to the time frame for the EU to harmonize its Rules of Origin. The EU wants India's Rules of Origin to be as close to GSP as possible.
Finally, Kasturi Das from Centad extended a vote of thanks to all the participants for the enriching discussions, insightful presentations and useful interventions in technical areas.
Day 2 was followed by a Civil Society Workshop on day 3 (November 1, 2007) |
