INDIA-EU TRADE AND INVESTMENT AGREEMENTS

• Recently, India and the European Union concluded the first round of negotiations for India-EU Trade and Investment Agreements in New Delhi.
• 52 technical sessions covering 18 policy areas of the free trade agreement and 7 sessions on Investment Protection and Geographical Indicators were held.
• The second round of negotiations is scheduled to take place in September 2022 in Brussels.
• India and EU had launched talks for having a wide-ranging Free Trade Agreement (FTA) officially called broad-based BTIA, long ago in 2007
• The BTIA was proposed to encompass trade in goods, services and investments.
• However, the talks stalled in 2013 over differences on market access and movement of professionals.
• India’s bilateral trade with the European Union amounted to over 116 billion dollars in 2021-22.
• Despite the global disruptions, bilateral trade achieved impressive annual growth of more than 43% in 2021-22.
• Currently, the European Union is India’s second-largest trading partner after the US, and the second-largest destination for Indian exports.
• The EU’s share in foreign investment inflows to India has more than doubled from 8% to 18% in the last decade, making the EU the first foreign investor in India.

Challenges

• EU investment treaty practice illustrates its keenness to include the Most Favored Nation (MFN) provision in its investment treaties.
• India is averse to including the MFN provision in investment treaties.
• EU’s practice is to include in its investment treaties the Fair and Equitable Treatment (FET) provision.
• FET is an important substantive protection feature that enables foreign investors to hold States accountable for arbitrary behavior.
• The FET provision is missing in India’s Model Bilateral Investment Treaty and the recent investment treaties that India has signed.
• EU has been batting for a Multilateral Investment Court (MIC) to reform the existing arbitration-based Investor-State Dispute Settlement (ISDS) system.
• Yet, India’s official position on MIC is unknown. India hasn’t contributed to the ongoing negotiations towards establishing a MIC, which is perplexing for a country that champions a rules-based global order.
• The non-tariff barriers in pharmaceuticals that the EU has imposed include requirements of World Trade Organisation- Good Manufacturing Practice certification, import bans, antidumping measures and pre-shipment inspection among others.

Significance of EU for India:

• The EU works closely with India to promote peace, create jobs, boost economic growth and enhance sustainable development across the country.
• As India graduated from low to medium income country (OECD 2014), the EU-India cooperation also evolved from a traditional financial assistance type towards a partnership with a focus on common priorities.
• At the 2017 EU-India Summit, leaders reiterated their intention to strengthen cooperation on the implementation of the 2030 Agenda for Sustainable Development and agreed to explore the continuation of the EU-India Development Dialogue.

Way Forward

• India can pursue EU countries to engage in Indo-pacific narrative, geo-economically if not from security prism.
• It can mobilise massive economic resources for sustainable development of regional infrastructure, wield political influence and leverage its significant soft power to shape the Indo-Pacific discourse.

SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT