Bilateral Trade and Investment Agreement is a Free Trade Agreement between India and EU, which was initiated in 2007. Even after a decade of negotiations, India and EU have failed to resolve certain issues which have led to a deadlock.
Hindrance in its finalization:
- India has not been granted “data secure” status by EU.
- U.K. visa rules discriminate against Indian technical professionals including because they have hiked visa fees and have numerical caps on visas.
- EU imposed a ban on sale of 700 pharmaceutical products even though they were clinically tested by GVK Biosciences.
- India cancelled most bilateral investment agreements with EU member states in 2016 on grounds that they were outdated.
- Presence of non-tariff barriers on Indian agricultural products in the form of sanitary and phytosanitary measures which are too stringent and enable the EU to bar many Indian agricultural products from entering its markets.
What are EU’s demands?
- Reduce taxes on liquor (which would benefit France)
- Reduce taxes on automobiles (which would benefit Germany)
- To negotiate the Bilateral Investment Treaty before it starts negotiating the EU-India BTIA.
- More market access with less duty interference.
- Wants India to liberalise accountancy and legal services.
- Multilateral pact on investments at the World Trade Organisations that will have an Investor-State Dispute Settlement (ISDS) mechanism which will allow corporations to take sovereign governments to international arbitration.
Why India not accepting EU’s demands?
- India is presently trying to set up its own automobile industry which would not be able to match the competition from EU automobiles.
- Tax reduction on wines and spirits is not acceptable as these are regarded as ‘sin goods’ and the states which derive huge revenue from liquor sales would be reluctant to cut taxes.
- Indians do not want foreign lawyers and accountants to practice in India. There is already a shortage of jobs.
India’s demands :
- Being considered ‘data secure’ is crucial for a number of services especially in the IT and ITES sectors.
- Liberalisation of services in Mode 1 (cross-border trade) and Mode 4 (presence and movement of natural persons).
- Free access to European Markets for the textile industry.
- Bilateral Investment Settlement Dispute Mechanism in which only after all options for settling disputed between a sovereign government and a corporate in domestic courts have been exhausted do we want to allow the issue to be taken up in international courts.
Way forward :
- Improving India’s investment climate is a better way to promote investment and job opportunities.
- Similarly, strengthening its IPR regime will help attract more FDI and aid R&D. India shouldn’t press on clauses like exhausting domestic legal remedies before proceeding for international arbitration under its investment rules.
- The, EU, too needs to be flexible on its demand for TRIP+ rules that encourage evergreening and hurt the cause of innovation.