India and the European Union the Reciprocal Way?

The European Union has come a long way from being the Economic Coal and Steel Community in 1951. Formally established by the Maastricht Treaty of 1993, the European Union today consists of 27 countries, 495 million people1. With a combined GDP that overtakes even the USAs GDP2, the EU is a power to reckon, and partner, with. India, which is popularly being accepted as a growing economic, political and strategic partner for many countries, such as France, Russia, United States of America, China, Indonesia (to name a few) is an ideal partner for the EU in the aforesaid aspects. This growing reciprocity and alliance could lead to a potential super-potent rapport, the benefits of which will spill-over to the rest of the world, thanks to globalization and increased interdependency. The relationship between India and EU dates back to the 1960s, which got stronger when in 1973, India signed two bilateral agreements with the EU. In 1984, a cooperation agreement was signed; in 2005, an action plan was launched. There are many aspects of the Indo-EU relation that are being explored today. Nuclear Energy, Logistics, Trade and Aid, and Security aspects are the dominant arenas for the development of present relations. Even facets like Education and Human Rights can play a major role in strengthening the relationship between the worlds largest democracy and the largest group of democratic nations in the world3. Though the Indo-EU relations are progressing in quantum and form, a few obstacles exist in policies and outlooks which put a question-mark on the viable future of certain aspects of this burgeoning cooperative cartel. This is at least partially linked
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http://europa.eu/abc/keyfigures/sizeandpopulation/index_en.htm Gitanjali Nataraj, Pravakar Sahoo Enlargement of EU: Effect on Indias Trade EPW (Vol. 39 No.19) 3 Alvadore De Vasconcelos in the Foreword of the Report of the Second India-EU forum on Effective Multilateralism held at Brussels.

to the enormous information gap which exists in the EU about India and in India about the EU. This is being bridged by the introduction of students and scholars into the picture of setting up think-tanks and discussion forums for the sole purpose of bringing the relationship between India and the EU to the desks of the very Future. Trade between India and EU the downside: The trade between India and EU has many an implication. Already there is a consensus in India that the trade relations between the two parties are unfair and lopsided. The reason: While 20 percent of Indias trade is with the EU, only around 2 percent of EUs trade is with India. In 2003, there was an apprehension that the enlargement of the EU will prove detrimental to the interests of India. NTBs (Non-Tariff Barriers) were the principal cause of such anxieties. Since 2003, we have come a long way in terms of trade relations but we are yet to plunge into full-fledged trade with each other. The very fact that in 2005 itself our bilateral trade grew by 20.3 percent4 was reason for the EU Commission, in 2007, to propose to negotiate with India a Free-Trade Agreement for smoother trade relations. However, this has become a bone of contention between the public in India and the officials of both India and the EU because of its massive de-regulation. The bilateral agreement has run into a lot of tangles with regard to impact on the healthcare industry, cheaper imports, and agriculture among other issues. Agriculture: While the intent behind the bilateral agreement is sound, and the spirit of cooperation is being kept out, one must ponder over how fair is the proposed FTA to India? If the principle of reciprocity is to be followed in terms of International Relations Theories, then the advantages and disadvantages to both the negotiating parties must be on equal footing. However, it is being heavily contended in India and abroad that the EU-India FTA will ensure a reduction of 90% of Indian import duties to zero on day one of implementation, while leaving the heavy subsidies on European agricultural goods unaffected. This will, in turn, hit the Indian agricultural sector hard impacting lives and
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Bilateral Trade Relations with India (ec.europa.eu)

livelihoods dependent on it5. Considering the fact that almost half the population in India is dependent on agriculture for their survival, this is a serious charge against the ongoing talks with regard to the FTA. Small and marginal farmers, processors, distributors and retailers in India will be pitched against the power of multinational retail firms. Is this fair to the newly liberalized economy of a developing country? While the Prime Minister and the Finance Minister will find it advantageous to have an economy without regulations and restrictions, a classic neo-liberal economy, is it viable in a country like India where even today there is almost 30% of the population in dire poverty? Even when looked at from the angle of Revenue to the Exchequer, it is an anomaly to have such a provision in the FTA. As a popular e-magazine6 puts it: Our import duties are higher in comparison to the EU. Indias average import duties are 32% for agriculture and 10% for industrial and fisheries imports. Import duties are also the easiest way of collecting taxes for the government since goods cannot enter without the necessary duty. However, the EU India FTA along with the others that the government is negotiating will create a major loss of import duty income for the government and affect our national budget. This in turn is likely to have serious impacts on Government spending in social sectors like education and health and the proposed National Food Security Bill. I, personally, think that this aspect of the FTA ought to be re-negotiated and an acceptable solution, or amendment, should come into force. Reciprocity is being contained by such one-sided proposals. The EU-India relationship is definitely something advantageous to the country, but if it comes at the cost of the Common Man, in the belief that the benefits of such an agreement will finally trickle down, it is just not worth it in its present state. Healthcare: One of the harmful provisions in the FTA is `data exclusivity. If India introduces data exclusivity, generic companies wishing to register a medicine will be
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http://www.bilaterals.org/spip.php?article17263 www.bilaterals.org

obliged to repeat clinical studies. Data exclusivity creates a new patent-like barrier to access to medicines and vaccines7, even when these products are not protected by a patent. Article 10 of the draft FTA contains the obligation of India to impose Data Exclusivity over pharmaceutical products; Article 9.3 would compel India to extend the monopoly accorded by a patent for up to 5 more years (in addition to the current 20), to compensate for the time required to get the marketing approval for a medicinal product8. Another aspect that its detrimental to the Indian angle of this agreement is with regard to the Compulsory Licensing as per the Indian Patent Act. Under Section 84 of this Act, Compulsory Licensing which can be enforced under certain conditions, such as when a patented drug is available in insufficient quantity or when the price is out of the reach of common people or in order to remedy anti-competition practices and in circumstances of extreme urgency or emergency. But if data exclusivity law protects such data, then the grant of Compulsory Licensing will be of no use to generic companies, as data exclusivity law will act as a barrier to marketing approval of generic version of patented drugs thus running contrary to the rationale behind the Compulsory Licensing. Imports and other related issues: Some of the other contentious issues with the FTA are the troublesome dilemmatic issue of a cut in import duty for many imports. Since the cut in duty will make imports cheaper, the competition to the local producers will increase phenomenally rendering them helpless against a wave of sudden increased competition, especially in the case of the Automobile Industry. It is obvious that the
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In 2008-09, according to data from the ministry of commerce and industry, India exported pharma products worth Rs 39,538 crore, with African countries being major importers. International humanitarian aid organisations like Medecins Sans Frontieres buy more than 80% of their requirement for AIDS drugs, and 25% of drugs for malaria, TB, and antibiotics from India, said Leena Menghaney, project manager, India, Campaign for Access to Essential Medicines. Moreover, approximately 50% of essential medicines that UNICEF distributes in developing countries come from India, while 75-80% of medicines distributed by International Dispensary Association are made in India.
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http://www.dnaindia.com/money/report_india-eu-fta-gets-flak-in-europe_1347904

neo-liberals in the higher echelons of governance will want to push for growth and pro-reforms. Again, the question is not about the ideology as much as it is about a fair deal. Most countries in the EU are far more developed than India. When a deal such as this impacts an underdog in an adverse way, even if the pros are higher in quantity (not necessarily quality), is the principle of reciprocity being upheld validly? Another issue is that of transparency. The fact that consultations regarding this FTA have not been made very accessible to the public by the Indian authorities is very troubling. A letter to the Prime Minister has been publicly written by The Forum Against FTAs. They contend that an unfair agreement is being tabled. The fact that non-trade barriers of the EU countries is not going to be scrapped while India is being put in a spot by insistence of removal of barriers for free flow of trade is sycophantic, to say the least. The letter also appeals for transparency in operations. Climate Change: In the midst of the bad talk going on about the nascent FTA between India and EU, other concerns (which benefit both the parties) are not being given enough coverage. Climate Change Issues is one such facet. In the Copenhagen discussions, there was considerable dissatisfaction amongst the all the participants. The Indian representatives contend that the EU was so insistent on the USA being a part of the final consensus that it did not push for the adoption of an international regime commensurate with its own final proposals9. This attitude was dubbed as defeatist in nature, especially by the developing countries. Now, it is absolutely vital that India and the EU come to some sort of an agreement in order to push for more stringent measures with regard to this issue. The dominance of USA cannot come into play, and this must not lead to a compromise in EUs proposals. While the talks of a green revolution are still far-fetched, a reciprocal relationship with regard to containing the detriment of Climate Change is still viable and rudimentary for setting a stark example of commitment and a healthy alliance for a fruitful and peaceful purpose.
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Report of the Second India-EU Forum on Multilateralism held at Brussels.

Logistics: an important facet of increased cooperation between India and EU Logistics play a vital role in the Indo-EU relations. India and the EU have similar perks and grievances with regard to Logistics. Both India and EU suffer from a constant congestion of roads and ports. Due to the cardinal place that global supply chains hold today, one cannot afford to neglect this aspect of trade. Also, EU and India, both, have a major stake in Maritime transport. Of course, EU and India have differences with regard to the stage of multimodalism that exist in the regions. While EU has started the inter-modal freight transport systems, India is still grappling with issues of octroi, and customs clearance to name a few10. A reciprocal relationship in terms of exchange of technology, research and development, and transport systems will definitely go a long way in cementing the bilateral ties between India and the EU. For India, this will be even more beneficial because of the dominance of EU in the field of logistics (especially skill and training), warehouse management, road and trucking operations, port management, etc11. Nuclear Energy and other Scientific Advancements: Nuclear Energy and other Scientific Advancements can play an important role in being the binding tie for India and the EU. On November 6th, 2009, India and the EU signed the International Thermonuclear Experimental Reactor (ITER) project to strengthen Indias participation in use of clean energy. As Europa (EUs official website) succinctly puts it: Research cooperation between the EU and India started in the mid-1980s and the first EU-India Science and Technology (S&T) Agreement was signed in 2001 and extended in 2009. India has become the fourth largest international partner for the EU under the 7th (2007-2013) EU Framework Programme for Science and Technological development (FP7). Indian organizations are participating in research projects in various technological areas of which health, environment,
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Debanjali Ganguli, Logistic Services Under India-EU TIA (Report published by Indian Council for Research on International Economic Relations, September 2008) pp 61 11 Ibid. pp62

food agriculture biotechnologies and ICT are the most prominent. India has become a full partner in the International Thermonuclear Experimental Reactor (ITER) nuclear fusion project. A Joint EU-India Call for Proposals on Solar Energy Research was launched in 2009 with 5 million contributions from each side12. This goes to prove that India and EU, can potentially share a reciprocal relationship with regard to science and technology. India has recently applied for membership to the CERN. That, too, can be a step further in cementing the ties between these two parties. India, especially, has a lot to learn from the technological advancement of the EU. In this sphere, perhaps, not many will have an issue with the lopsidedness, since ultimately, in the long run, it is bound to benefit us! Conclusion The turn of the century has seen an increased level of globalization in India. Due to this mammoth phenomenon, ties with other countries and blocs have become essential. The European Union with its geo-political and economical largesse is a requirement India cannot ignore. India, too, being one of the largest markets in the world and a geo-physical paradise for investors is required by the EU for their expansion of global presence. In such a situation, it is imperative that these two powers negotiate further, come to acceptable treaties (acceptable not only by the neo-liberals of the Indian Officials but also by the public junta, as such), and set in motion a long, fruitful relationship that the world seeks to emulate.

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http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/10/265&type=HTML