India-EU trade pact hindered as differences arise

08-Feb-08

India and the EU had agreed to include at least 90% of traded products in a proposed bilateral agreement. This means that India will be allowed to exclude not more than 10% (450 products) of tariff lines from formula cuts. Recently emerged differences could hinder a comprehensive trade and investment agreement between India and the European Union. Differences have arisen with regards to items which would be kept off the pact. India is yet to submit its list of items which it wants to retain in the negative list. More items are desired to be included on India's negative list, as it comes to light that those sectors that are not vulnerable to competition from EU countries desire to play it safe. This has led to delay in finalisation of India's negative list. India would benefit in a big way if the EU opens its doors for Indian professionals. The broad purpose of opening up trade in services would suffer a setback, if the differences over negative list of goods are not resolved. Concurrently, the EU negative list includes items which will not get customs duty concessions under the free trade agreement (FTA). The EU has submitted a list of 226 products, mostly chemicals, petrochemicals, plastics, ceramic and glassware items. Several sections of the Indian industry feel they would be denied concessional market access under the FTA if the EU negative list is not trimmed. India's commerce department has circulated EU's list to the relevant ministries and departments so that the items of export interest could be identified. This would enable early launch of negotiations with the EU for removal of items of Indian industry's interest from the list. EU's suggested negative list has been circulated to the departments of chemicals & petrochemicals, fertilisers, health and Ayush (ayurveda, yoga & naturopathy, unani, siddha & homeopathy). Views have also been sought from the export promotion councils of chemicals & allied products, basic chemicals, pharmaceuticals & cosmetics and plastics.