India, EU aim to break Free Trade Agreement impasse

India has inked 83 BITs, including with several EU member countries. File Photo: Reuters  

Commerce Minister Nirmala Sitharaman will meet European Union Commissioner for Trade, Cecilia Malmström, on the sidelines of an Organisation for Economic Co-operation and Development’s Ministerial Council Meeting in Paris on Thursday to discuss revival of the India-EU Free Trade Agreement negotiations.

The FTA talks have been deadlocked since 2013 after 16 rounds of negotiations. The talks had begun in 2007. During the meeting, the EU is also likely to raise its concern over what it called India’s “unilateral termination” of existing Bilateral Investment Treaties (BITs) with “a significant number of” EU-member countries.

In a letter dated May 25 reviewed by The Hindu, Ms. Malmström wrote to Ms. Sitharaman and Finance Minister Arun Jaitley that “the Indian Government has informed a significant number of EU Member States of its intention to terminate BITs concluded with them. These notices have been accompanied by a request to open negotiations for new investment agreements, based on India’s new model (BIT) text.”

Renegotiating BIT

“I assume that the aim of this initiative is to propose the renegotiation of the BITs rather than to formally announce India’s withdrawal from the BITs,” Ms. Malmström noted. “Given that the EU Member States do not have the possibility to renegotiate the BITs with India, the unilateral termination of the existing BITs by India would entail serious consequences. It would create a gap in investment protection and consequently discourage EU enterprises from further investing in India,” she said. India has inked 83 BITs, including with several EU member countries.

India had put on hold new BITs as investors have dragged the South Asian nation to international courts with an aim to seek huge compensation for “losses” suffered due to reasons such as changes in government policies.

Policy shift

Ms. Malmström said: “I truly hope that India will not opt for such a radical policy shift with regard to investment from the EU.”

She urged India “not to take further steps towards denouncing the BITs concluded with the EU Member States, but allow these BITs to be replaced in a mutually agreed framework.” In December 2015, the Cabinet approved a new model BIT text.

“The revised model BIT will be used for re-negotiation of existing BITs and negotiation of future BITs and investment chapters in Comprehensive Economic Cooperation Agreements/ Comprehensive Economic Partnership Agreements/FTAs.” according to the government.

The India-EU FTA talks, officially called the broad-based Bilateral Trade and Investment Agreement, have been stalled since 2013 as the negotiators failed to arrive at a compromise solution to address the demands of both the sides.

The EU’s key demands include India to drastically cut or eliminate duties on automobiles and wines and spirits, while India's main demands pertain to data security status (crucial for India's information technology sector to do more business with the EU firms) and easier temporary movement of skilled professionals. Both the sides have already held stocktaking meetings in January and February this year.

WTO talks

On the sidelines of the OECD meeting, Ms. Sitharaman will also attend a meeting of trade ministers of the World Trade Organisation (WTO) member countries on ways to take forward the “Nairobi Package” adopted in December 2015.

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Printable version | Oct 19, 2021 7:39:25 AM |

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