New Delhi: The European Union has said its first high-level dialogue on trade with India saw interest by both sides in resuming negotiations for an ambitious, comprehensive and mutually beneficial trade and investment pact once their respective approaches and positions are “close enough”.
It said the two sides had “open and constructive” exchanges on a broad range of issues with an aim of enhancing EU-India bilateral trade and investment relations.

The EU said the dialogue covered issues like impact of the coronavirus pandemic as well as production of vaccines and their distribution.

The decision to establish the high-level dialogue mechanism on trade and investment was taken at the 15th EU-India summit in July last.

The meeting on Friday was co-chaired by Commerce Minister Piyush Goyal and Valdis Dombrovskis, the executive vice-president and commissioner for trade of the EU.

The negotiations between India and the EU on a free trade agreement have been stalled since May 2013, when both sides failed to bridge substantial gaps on crucial issues, including data security status for the IT sector. The negotiations were launched in June 2007.

“Minister Goyal and Executive Vice-President Dombrovskis reiterated their interest in resuming negotiations for ambitious, comprehensive and mutually beneficial trade and investment agreements once their respective approaches and positions are close enough,” the EU said in a statement.

“In the meantime, they examined alternative approaches and looked into the possibility of opening new areas of cooperation, for instance in relation to the resilience of global value chains and regulatory cooperation, notably in relation to new technologies,” it said.

The statement was released by the EU’s office in India on Monday.

“In the run up to the Leaders’ Meeting, the co-chairs tasked experts to look into the feasibility of resuming work on trade and investment agreements; new areas of cooperation (regulatory aspects and resilient value chains); as well as enhancing collaboration on WTO reform,” the EU said.

“This will be followed by another meeting of the high-level dialogue to take stock of experts’ discussions ahead of the Leaders’ Meeting,” it said.

The EU-India annual summit is expected to be held later this year.

The EU said Dombrovskis and Goyal discussed trade and investment issues with emphasis on the socio-economic impact of the COVID-19 pandemic as well as vaccine production and distribution mechanisms, including value chain linkages.

The two sides exchanged views on “the state of play of EU-India bilateral trade and investment relations, and possible ways forward”, it said.

“The two sides recalled their continued attachment to the rules-based multilateral trading system,” the EU added.

It said Dombrovskis and Goyal further exchanged views on various key policy developments and market access issues.

“The EU side provided an update on the ongoing review of the Generalised Scheme of Preferences, which expires end of 2023, and on the work towards EU Carbon Border Adjustment Mechanism under the European Green Deal, while the Indian side provided an updated on the ‘Make in India’ and ‘Self-Reliant India’ initiatives,” the EU said.

Future carbon border tax should be introduced for products of oil refineries and the glass, paper and aluminium industry and not only for the power sector and energy-intensive industrial sectors like cement, steel, chemicals, and fertilisers, European lawmakers said.

The Committee on the Environment, Public Health and Food Safety of the European Parliament will vote on a report regarding the planned European Union carbon border adjustment mechanism (CBAM) that would be compatible with the rules of the World Trade Organization. The document will be later adopted as a European Parliament’s resolution to set the parliamentarians’ position ahead of the European Commission’s formal legal proposal for CBAM, expected by the end of June.

In one of the amendments, the parliamentarians are asking the European Commission to make the scope of the carbon border tax very broad.

“The European Parliament Considers that a CBAM should eventually cover all imports, but that in an initial phase, from 2023, it should cover the power sector and energy-intensive industrial sectors like cement, steel, aluminium, chemicals, glass, paper, oil refining and fertilisers, which continue to receive substantial free allocations, and still represent 94% of EU industrial emissions,” the article reads.

The current version of the document didn’t include oil refining, glass, paper, and aluminium, but representatives of the green, liberal, socialist and centre-right groups joined up to table an amendment to broaden the scope of CBAM.

Frans Timmermans, European Commission executive vice-president for the European Green Deal, recently said the EU would introduce a carbon border tax on non-EU countries unless they commit to lowering their emissions.

It could heavily affect big economies like China but also the Western Balkans and other countries.

Investment facilitation, regulatory cooperation, trade barriers and IPR may

India and the EU will take forward discussions on the launch of an investment facilitation mechanism, initiation of regulatory cooperation and removal of identified trade barriers for their possible inclusion in the list of deliverables at the Leaders’ Summit scheduled in May 2021 in Portugal, a government official has said.

At the recent India-EU high level trade group meeting led by commerce & Industry Minister Piyush Goyal and his counterpart from the European Commission Valdis Dombrovskis, the two decided to meet within the next three months to give a final push to quick deliverables before the Summit.

India, EU discuss re-initiating talks on bilateral free trade pact starting with interim agreement

Other issues that Prime Minister Narendra Modi and leaders from the European Union and European Commission are likely to discuss at the India-EU Summit include continuation of the Intellectual Property Rights (IPR) dialogue, collaborating in research and innovation, promoting clean economy, addressing multilateral issues of mutual interest and building resilient value chains, the official tracking the matter told BusinessLine.

More ambitious agenda

The EU is the second largest export destination for India, after the US, with exports in April-March 2019-20 at $45 billion accounting for 14.36 per cent of the country’s total exports. Imports from the bloc into India were at par with exports at $45 billion during the fiscal, accounting for 9.5 per cent of India’s total imports.

“Despite Covid-19, the decisions taken at the last India-EU Summit in July 2020 have been taken forward by the two sides in great earnestness. The two sides are of the view that it is the right time to draw a more ambitious agenda for mutual cooperation,” the official said.

It was at the July Summit that a decision was taken to form an India-EU high level trade group to discuss and take forward at the Ministers’ level, all pending trade related matters and also address new ones.

At the first meeting of the high level trade group last week, Dombrovskis informed that Portugal had assumed the rotating presidency of the Council of the EU from January 1, 2021, and it had made EU-India relations a top priority, the official added.

Early Harvest Programme

Although a decision is yet to be taken on when the talks on an India-EU free trade agreement (Broad-based Trade & Investment Agreement) will be re-launched, India has expressed its keenness to start with an Early Harvest Programme at the earliest and then move on to a full-fledged pact.

“Both sides agreed on monthly progress review of discussions by senior officials and quarterly review by the Ministers for providing guidance,” the official said.

It would take concerted efforts to re-start the talks that were suspended in 2014 over serious differences on issues such as market access for wines & spirits, automobile and financial institutions as well as EU’s insistence on inclusion of non-trade issues such as labour and environment.

Putting in place better investment facilitation measures and greater regulatory cooperation are issues that both sides have been pushing for as it could greatly facilitate business between the two sides. Lack of understanding of regulatory procedures has resulted at times in rejection of Indian exports in EU countries while investors from EU have been seeking simpler investment procedures in India.

The European Investment Bank (EIB)  has provided €2.7 million ($3.3 million) to Microfund for Women to boost the financing of micro-enterprises in Jordan during and after the COVID-19 pandemic. The new financing is expected to support around 9 100 new beneficiaries, more than 90% of whom will be women.

This new financing is a top-up of the €4.1 million ($5 million) financing agreement signed in November 2018 to provide microloans to micro-entrepreneurs running income-generating activities in both urban and rural areas, including self-employed individuals, sole proprietors and micro-entrepreneur groups.

The EIB financing comes under Team Europe’s response to the COVID-19 pandemic. It is carried out under the Southern Neighbourhood Microfinance Facility (SNMF) – a €71.3 million lending facility that supports investments in microfinance markets in Southern Neighbourhood countries. The facility blends EIB resources with European Commission resources under the Neighbourhood Investment Facility.

EIB Vice-President Dario Scannapieco commented on the new financing: “We are pleased to strengthen our partnership with Microfund for Women. The additional €2.7 million in financing will increase the outreach of MFW to support more Jordanian micro-entrepreneurs, mainly women, during these difficult times. Micro-entrepreneurs are the most vulnerable to the new challenges arising from the spread of the COVID-19 pandemic. As the Bank of the European Union, we are keen to support entrepreneurship in Jordan to sustain and create jobs.”

EU Ambassador to Jordan H.E. Maria Hadjitheodosiou welcomed this new operation with Microfund for Women as a part of the Team Europe initiative, indicating that “this project reflects the European Union’s commitment to supporting partner countries, such as Jordan, addressing the impact of the COVID-19 pandemic and at the same time fostering women’s empowerment in Jordan, by helping them achieve sustainable livelihoods for themselves and their families, alongside other women empowerment projects supported by the European Union.”

Muna Sukhtian, MFW Managing Director, also commented “we value our long term partnership with the EIB and we look at it as a success story. We are fully aware of the challenging times that our beneficiaries are going through due to the effects of the COVID-19 pandemic so we are carefully studying their situations. We are pleased that we will be utilising this EIB financing to offer new solutions to beneficiaries such as refinancing and rescheduling, in addition to empowering them in rebuilding their businesses by helping them secure various new marketing channels. The funds will also be used to attract potential young entrepreneurs and women interested in setting up new projects.”

“Previously, the first loan we received from the EIB was used to offer more than 1 250 microloans, 91.5% of which went to women and 26.6% to young entrepreneurs, covering the following sectors: trade, production and services,” added Muna Sukhtian.

The EIB has been collaborating with the Microfund for Women since 2014. It is the leading microfinance institution (MFI) in Jordan dedicated to empowering micro-entrepreneurship. Currently, the Fund has more than 124 000 active borrowers with a strong focus on women.

Background information

The European Investment Bank (EIB) is one of the leading development finance players in the Mediterranean region. The Bank’s goal is to support economic and social development by improving people’s living conditions. The EIB aims to establish a tangible presence in partner countries, focusing on their economic and social priorities. It not only contributes its financing capacity, but also adds value in project implementation and the modernisation of public policies thanks to its technical and financial expertise and advisory services.

The Risk Capital Facility for the Southern Neighbourhood provides access to equity and debt financing to MSMEs in the Mediterranean region in order to support private sector development, inclusive growth and private sector job creation. Set up by the European Commission and EIB, it builds on the success of the ENPI-FEMIP Risk Capital mandate 2007-2013 which was fully deployed despite the unprecedented geopolitical turmoil in the target region.