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Talks on trade with India to start once circumstances are right: EC chief

Subhayan Chakraborty/New Delhi 07 Oct 17 | 02:48 AM

Prime Minister Narendra Modi with Donald Franciszek Tusk, President of the European Council and Jean-Claude Juncker, President of the European Commission before their meeting at Hyderabad House, in New Delhi (Photo: PTI)

Negotiations on the proposed trade and investment pact between India and the European Union (EU) will restart "once circumstances are right for both parties", European Commission President Jean-Claude Juncker said on Friday.

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Juncker told the media on the third and last day of his three-day visit to India that talks should not start for the sake of starting over.

He stressed that further discussions with Commerce and Industry Minister Suresh Prabhu will happen later this week on the sidelines of the World Trade Organization's mini-ministerial taking place in Morocco on October 8-9.

The Bilateral Trade and Investment Agreement (BTIA) - the official free trade pact with the EU - has been pending since 2007 on account of a number of bottlenecks such as growing differences regarding greater market access sought by both for merchandise exports.

However, talks have hit a wall after India decided to terminate existing bilateral investment treaties (BIT) with 23 European countries in 2016. Subsequently, the European Union (EU) had warned that the move will stop investments from its member countries and asked India to keep these individual agreements in force until a new agreement is signed.

However, India has continued to maintain that all future investment pacts will be negotiated under the framework of the model Bilateral Investment Treaty released by the government back in 2015.

This is expected to form the basis on which individual agreements will be negotiated with other nations. However, the hitch lies in the fact that most negotiations are not time-bound whereas the existing treaties themselves would end over the coming year.

On the trade front, both sides had last year adopted an agenda in Brussels, which pushes for a broad based approach to "resolve trade irritants in particular concerning goods, services and investments, and strengthen trade and investment relations".

On this note, issues related to facilitation of greater movement of professionals from one country to another is another point of contention between the two sides. This also involves India's demands to be classified a data- safe country, which will help Indian information technology and outsourcing companies gain a foothold.

Juncker also stressed on strengthening bilateral programs on setting high standards of data protection.

Other than being India's largest trading partner and its biggest export destination, the bloc has also been New Delhi's 'strategic' partner' since 2004. Total exports to the 27 member nations of the EU including the United Kingdom reached $47.16 billion in 2016-17 from $ 44.46 billion. On the other hand, imports dipped slightly to $42.35 billion in the last financial year from $ 43.98 billion in 2015-16.

This translates to 17 per cent of total exports and 11 per cent of total imports for India.

The EU's share in India's total trade has also progressively shrunk in recent years. Indian exports to the block have shrunk from 21.84 per cent in 2004-05 to 16.04 per cent in 2014-15. Imports have witnessed a similar slide over the same period, going down from 17.30 per cent to 10.98 per cent.

While trade and investment talks may not have advanced far between India and the EU, the visit by European Commission President Jean-Claude Juncker has remained witness to unusual displays of diplomatic conduct.

Scheduled to deliver the keynote address at the end of an event on Friday, Juncker had sat through a long speech by minister of state for Foreign Affairs M J Akbar.

While Akbar had started by pointing out the friendship and cooperation between India and EU, the rest of his long speech was dominated by the reforms initiated by the Modi government such as Jan Dhan Yojana and Swacch Bharat Abhiyaan.

Subsequently, after taking the podium Juncker said with a smile that he had admired Prime Minister Narendra Modi's speech during India's last independence day but Akbar's detailed list of reforms sounded like 'propaganda upon propaganda'.

Usual bonhomie aside, the event also saw Juncker finish his speech and gently pat Akbar on the head before taking his seat. Diplomats were seen furiously debating the meaning of the move while Akbar looked visibly confused before leaving the venue.

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