New Delhi, Nov 15 IANS | 11 months ago

A free trade deal between India and the European Union is unlikely before the 2014 general elections as the current government won't be willing to make any unpopular compromises required to conclude the agreement, says a top diplomat from the grouping.


Belgian ambassador to India Pierre Vaesen said both India and the 28-nation European Union (EU) need to make compromises and unpopular concessions to conclude the deal.

India and EU have been negotiating a broad-based Trade and Investment Agreement since June 2007. Despite a several rounds of talks, no breakthrough has been reached as both sides have differences on several issues.

"We need to have a balance agreement. That needs concessions. That needs unpopular concessions. I don't think any government so close to the election can take any unpopular step," Vaesen told IANS in an interview.

He hoped that the new government that comes into power after the 2014 general elections would give priority to the agreement as it would benefit both sides.

Asked what impact the outcome of the election would have on the trade pact, Vaesen said: "I am not worried about which party comes into power, be is BJP (Bharatiya Janata Party) or Congress, they will have to realise that it's good for the country."

Vaesen, who has more than three decades of diplomatic experience, however, said political instability would definitely have negative impact on the prospects of the deal.

Based in New Delhi, Vaesen also heads Belgium's diplomatic mission in Bangladesh, Bhutan, Nepal, Maldives and Sri Lanka.

He said there are "vested interests" from both sides that are partly holding back the progress on the negotiations.

"There are vested interests from both side, whether you call it protectionism or whatever, but from both sides there are vested interests," he said.

The progress on the talks is stalled due to disagreements on the issues like import duties on automobiles, pharma and alcoholic products, and trade in services and intellectual property rights.

While the EU has been pushing for a greater market access for its products like automobiles, wines and spirit, India seeks greater access for its professionals and grant of "data secure" nation status by the EU.

Liberalisation of India's financial sector, especially increasing the foreign direct investment (FDI) limit in insurance, is also crucially important to conclude the deal.

Vaesen said the issues like reforms in India's banking and insurance sectors that need to be approved by the lawmakers are crucially important to conclude the deal.

The Insurance Laws (Amendment) Bill 2008 that seeks to raise FDI cap in the sector to 49 percent from the current 26 percent, is pending in the Parliament.

On India's demands for greater access to professionals, Vaesen suggested that the issue could be negotiated at bilateral level, if EU as a group did not agree.

"Mobility is a very important element. This is one are where most of the European countries are turning protectionist because there is high unemployment," Vaesen said.

However, he admitted that Europe need skilled people and higher mobility of skilled Indian professionals would be good for the European economies.

On Belgium's stand on the India-EU trade negotiation, Vaesen said Brussels is keen for early conclusion of the deal and also supports greater mobility of professionals. The EU is headquartered in Belgium's capital city Brussels.

(Posted on 15-11-2013)