Hopeful of EU trade deal by next yr: PM

India and the European Union today decided to put negotiations on an ambitious...

India and the European Union (EU) today decided to put negotiations on an ambitious trade agreement on the fast track. “We are engaged in negotiations over a broad-based trade and investment agreement. I am hopeful it will be in place by the next summit,” Prime Minister Manmohan Singh said at a joint press conference with his Portugese counterpart Jose Socrates after the eighth India-EU Summit here.

India and the EU have been negotiating a free trade agreement since October last year. Socrates and European Commission president Jose Manuel Barroso said discussions on the agreement remained the summit’s “centerpiece”. Both sides have agreed that the pact should cover over 90 per cent of bilateral trade.

Unlike in the Doha Round of WTO trade talks, India and the EU do not have divergence in the area of politically sensitive agricultural products. However, India has raised concerns over the non-trade and extraneous issues while the EU has broached subjects like public procurement.

For enhancing bilateral cooperation in the aviation sector, the summit leaders underscored the importance of finalising a mutually beneficial ‘Horizontal Agreement’. The initiative follows the India-EU Aviation

Summit in New Delhi in November last year.

The leaders agreed to develop a joint programme covering areas of energy, environment, research and climate change. The two sides signed a pact for the upgradation of science and technology cooperation and a memorandum of understanding for developmental cooperation.

But analysts say a deal could take years and India should beware of signing up quickly. “An India-EU free trade agreement is a very strategic idea,” said T K Bhaumik, chief economist at Reliance Industries.

But, he said, negotiations will be difficult. “Tariffs are not the real issue. The real issues will be non-tariff barriers such as labour, environment, technical standards and climate change.”