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The 28-member European Union (EU) is “encouraged” by the political momentum the long-discussed India-EU free trade agreement (FTA) gained at the summit held between the two in Brussels at the end of March, but both sides have not been able to fix a schedule to restart negotiations as yet, an EU official said.

Both sides have “outstanding issues” to sort out and “the European Commission offered India on several occasions and in different formats to create an adequate forum to discuss outstanding issues…to enable the process to move forward,” Daniel Rosario, a spokesman for the EU trade department, told a group of visiting Indian journalists on Monday.

The last round of talks on India-EU FTA was held in 2013 and the discussions have remained deadlocked on issues such as tariffs on automobiles and wines and spirits, Rosario said.

In the auto sector, EU is unhappy given that its exporters have to face Indian import duties of up to 100% on cars and car parts. And in the case of wines and spirits, European exporters face tariffs as high as up to 150%, Rosario said.

He said the EU had put forward several proposals in 2013 to break the deadlock.

“We suggested long transitional periods for their elimination or going as far as accepting asymmetric elimination of these duties in favour of India” in the case of automobiles, he said. In the case of wines and spirits, “the proposal made in 2013 was for a gradual if not complete elimination of these duties and taking into account the Indian sensitivities”, he said.

“We clearly identified the areas where we expect India to make some movement and we offered some fora to go into some specific discussions to allow for the general discussion to move ahead and for the time being, this has not happened,” he added.

When asked if the EU would agree to re-open negotiations from the start, Rosario said the EU could not “ignore all the work that has been done so far”.

Despite the many contentious issues, “we are encouraged to see that in the last (India-EU) summit at the end of March, both sides agreed to re-engage in this process to give it the necessary momentum”, Rosario said, referring to the 30 March India-EU summit in Brussels. India was represented by Prime Minister Narendra Modi and the EU side was represented by Donald Tusk, president of the European Council and Jean-Claude Juncker, president of the European Commission.

But Rosario did not seem to have an answer when asked when the talks will get going again.

According to analysts, the trade pact could serve as an “anchor” for bilateral relations, besides proving to European businesses that “India is open for businesses”.

The March India-EU summit was the first in four years and followed the EU’s refusal last year to confirm the dates of a proposed visit by Modi amid a diplomatic row over the slow progress in India of the trial of two Italian marines accused of killing two Indian fishermen in 2012.

Talks on the Bilateral Trade and Investment Agreement—the official title of the free trade pact—started in 2007 but progress has been tardy and marked by flip-flops. India cancelled a meeting with the EU chief trade negotiator in August last year in protest against an import ban on 700 of its generic drugs clinically tested by GVK Biosciences for alleged manipulation of clinical trials.

“The GVK issue, it’s a decision for us that has nothing to do with the negotiations of a trade agreement, it never had a link,” Rosario said.

Later, during a meeting between Modi and Tusk in the Turkish city of Antalya in November on the margins of a G-20 meet, both sides agreed to hold a stock taking meeting between the chief negotiators before resuming formal talks. The stock-taking talks, including a meeting between Indian commerce secretary Rita Teaotia and EU Trade Commissioner Cecilia Malmström in Brussels on 22 February, however, did not produce any results.

The impression in New Delhi seems to be that with the EU involved in talks with the US on the Transatlantic Trade and Investment Partnership, it is not focused on trade talks with Asia’s third largest economy. Also occupying European mind space is the British referendum, to be held on 23 June, on whether the country should remain in the EU.

“There was a long discussion on the trade agreement during the India-EU summit and we have conveyed to them (EU) that we are committed to the agreement,” said a person on the Indian side who is familiar with the developments.

On India’s part, disputed issues in the trade talks include the so-called Mode 4, a provision of the 1995 General Agreement on Trade in Services, which seeks to facilitate the movement of professionals from one country to another.

According to Shada Islam, director at the Policy Friends of Europe think tank based in Brussels, India-EU ties seemed to be a work in progress with India focused on consolidating ties with countries like the US.

“The India-EU relationship is not as vibrant as the EU-China partnership,” she said, adding that the 30 March summit “seemed to be the beginning of a new understanding with misconceptions on their way out”.

“At the moment, we (India and the EU) don’t have a strong anchor for our relations and the trade agreement could serve as that anchor,” she said.

Total bilateral trade between India and the EU, which is India’s largest trading partner, was €78 billion in 2015, according to EU figures.

The EU is one of the largest foreign direct investors in India with investments of €38.5 billion since 2000.

 

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