EU, India Trade Talks Make Progress Ahead of February Summit

Trade talks between Brussels and New Delhi, which were launched in 2007, are reportedly moving forward in advance of the upcoming India-EU Summit, scheduled for 10 February in New Delhi. While the pact is unlikely to be ready for signature by the February meet, both sides have confirmed that steady progress is being made toward concluding negotiations, possibly by year’s end.

At last week’s World Economic Forum in Davos, Switzerland, EU Trade Commissioner Karel De Gucht expressed confidence in the two sides soon reaching an agreement; however, he also indicated that there are still a “number of problems that have to be resolved.”

The pact was also backed at the Davos summit by British Prime Minister David Cameron, who made a push for concluding the EU-India agreement before the end of the year.

“Completing the free trade agreements with India, Canada, and Singapore could add €90 billion to Europe’s GDP,” he said.

Indian Commerce and Industry Minister Anand Sharma agreed that the deal is a complex one and that progress is being made.

The proposed pact would slash duties on over 90 percent of bilateral trade between the EU bloc and India, along with an opening of mutual markets for investments and services. Both sides have increasingly service-based economies, with 57 percent of India’s gross domestic product coming from services.

“The Indian economy has enormously to gain from interaction with the European economy. We are looking forward to both countries competing in services. It has to be an ambitious agreement; it cannot be a simple tariff on goods agreement,” EU Ambassador to India João Cravinho said in an interview with the Business Standard earlier this week.

EU-India trade has more than doubled, from €28.6 billion in 2003 to over €67.9 billion in 2010, according to European Trade Commission official data. Trade in commercial services has tripled from €5.2 billion in 2002 to €17.9 billion in 2010.

European Trade Commission estimates indicate that India would gain €5 billion and the EU over € billion in the short run alone, should the pact be finalised.

Tariffs on EU automobiles cause stir

With the India-EU summit fast approaching, concerns among European industry leaders have again been raised with regards to India’s tariff and non-tariff barriers. Indian tariffs on wine and automobiles have long been an area of disagreement between the two trading partners.

The EU car industry, which is led by Germany’s powerful VDA carmakers’ association, says the agreement would grant Indian-built cars immediate duty-free access to the EU but would only reduce the tariff barrier to European automobile exports from 60 to 30 percent.