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India-EU Trade Deal Grants 5-Year MFN Status to Boost Services Trade

India and the European Union have agreed to grant each other Most-Favoured-Nation status for five years under their newly reached free trade agreement. This provision ensures service providers from both sides receive treatment as favourable as any other country. A Joint Committee will review the arrangement in its fourth year, focusing on issues like Indian students' rights in the EU. The MFN treatment will not apply to areas such as taxation treaties or dispute settlement procedures.

Key Points: India-EU FTA: 5-Year MFN Status Agreement Details

  • 5-year MFN status for services
  • Joint Committee review in 4th year
  • Covers service sectors and providers
  • Excludes tax treaties and dispute settlement
  • Aims to boost trade and investment
2 min read

India, EU agree to grant each other MFN status for 5 years under trade deal

India and the EU agree to mutual Most-Favoured-Nation treatment for 5 years under new trade deal, covering services and subject to review.

"neither side can give better treatment to a third country without extending the same benefit to the other party - FTA Text"

Mumbai, Feb 28

India and the European Union have agreed to give each other Most-Favoured-Nation treatment for five years after their proposed free trade agreement comes into force.

The move is aimed at ensuring fair and equal treatment in trade in services between both sides.

Under the MFN provision, service sectors and service providers from India and the European Union will be treated at least as favourably as those from any other country.

This means neither side can give better treatment to a third country without extending the same benefit to the other party, subject to certain conditions and limits.

However, the MFN treatment will not apply to matters related to taxation treaties, mutual recognition of standards or authorisations, and dispute settlement procedures.

The agreement also allows both sides to provide special advantages in border areas for services that are produced and consumed locally.

The provision is part of the Trade in Services chapter of the FTA text that was made public on January 27.

As part of the arrangement, a Joint Committee will conduct a review in the fourth year of the agreement.

The review will focus on issues such as the entry and stay of Indian students in the EU, their rights to work, and rules governing the temporary movement of service providers.

Based on this review, the Joint Committee will decide whether to continue the MFN treatment beyond the initial five-year period.

Either side can also request a review if circumstances arise that negatively impact their interests. If the Committee decides not to extend the arrangement, the obligation to provide MFN treatment will end, although benefits already granted will remain in place.

India and the European Union had reached the long-pending free trade agreement last month. The deal aims to lower tariffs, improve market access and boost overall trade and investment between the two economies.

- IANS

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Reader Comments

R
Rohit P
Good move, but the devil is in the details. The exceptions for taxation treaties and dispute settlement are quite broad. We need to ensure our SMEs and startups get real benefits, not just the big corporations. The 5-year review period is sensible though.
A
Aman W
Finally! This FTA has been in the works for ages. Lower tariffs should help our exports like textiles, pharmaceuticals, and auto components. Hope it translates to more jobs and growth in the manufacturing sector. Let's see the implementation on the ground.
S
Sarah B
As someone working in the services industry, this is promising news. The MFN status should create a more level playing field for Indian service providers competing in the European market. The key will be how smoothly the mutual recognition of standards and qualifications works out.
V
Vikram M
While the intent is good, I have a respectful criticism. We must be cautious. The clause allowing either side to request a review if their interests are impacted could be used as a tool for protectionism later. Our negotiators need to ensure a strong dispute settlement mechanism is in place.
K
Karthik V
The provision for border areas is interesting. Could benefit local economies in states bordering EU nations. Overall, a strategic partnership that balances our interests. Hope it strengthens our position in global trade.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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