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Berlin accord

The free trade agreement isn’t yet done,but India-EU ties are robust

Written by T P Sreenivasan |
April 17, 2013 1:54:45 am

The free trade agreement isn’t yet done,but India-EU ties are robust

After the tensions between India and Italy over the shooting of two Kerala fishermen,there were concerns that the diplomatic episode might jeopardise India’s relations with the EU and that the six-year-old negotiations on the India-EU Broadbased Trade and Investment Agreement (BTIA) might flounder. But the mutuality of interests prevailed,tension was defused and the visit of Prime Minister Manmohan Singh to Germany was unscathed. It became clear that Indo-German ties would not relapse into indifference,as they had before India’s economic reforms,after the initial warmth between Nehru and Adenauer.

Democratic concerns and values shared by India and Germany had not been sufficient for a strategic relationship. The Cold War and the perceived Indian partiality towards East Germany had left their scars on ties. Strategic engagement came after the liberalisation of the Indian economy and the discovery by both sides of economic realities and necessities. For an export-oriented Germany,India,as a major emerging economic power,became a land of opportunities. Old cultural and educational linkages helped the process and today,India and Germany have a flourishing bilateral trade (biggest trading partner in the EU and fifth in the world),investments in both directions,cooperation in security and disarmament,counter terrorism and educational exchanges. The solidarity of the G-4,of which both Germany and India are members,as the champion of UN Security Council reform,has remained intact,even if its efforts have not succeeded.

No wonder,then,that Chancellor Angela Merkel defined the relationship as “very deep” and pointed out how India,with more than a billion people,with its need for infrastructure and investment,had provided great opportunities for Germany. Early in her career,as environment minister,she had relied instinctively on the Indian delegation to formulate the Berlin Mandate on climate change in 1995. Prime Minister Manmohan Singh,in turn,stressed that economic relations have been a defining feature of India-Germany ties. They then proceeded to witness their cabinet colleagues sign a plethora of agreements to enhance cooperation in higher education,promote German as a foreign language in India,strengthen civil security research,agriculture and consumer protection,create quality infrastructure for cooperation in standardisation and establish green energy corridors.

A tinge of regret,however,was evident in the statements made by the two leaders on the India-EU BTIA. Singh acknowledged that though much progress had been made,there were issues that held back the conclusion of the agreement. As a member of a viable union of independent states,Germany has the advantage of pursuing its interests bilaterally to gain ground and to remain adamant within the union to extract concessions in other areas. Members of the EU have hidden behind their collective positions on political issues and human rights and,at the same time,remained cordial with India on the bilateral front.

It was expected that the remaining issues on the BTIA would be ironed out at the ministerial meeting in Brussels. But Commerce Minister Anand Sharma was constrained by a letter from the chairman of the parliamentary standing committee on commerce,which said that India should not sign the BTIA till the committee deliberated on the issues raised before it. Differences persist in several areas of vital concern for India,even after sixteen rounds of negotiations. Essentially,these relate to the market access that the EU is seeking in various sectors,against Indian resistance. India would prefer to regulate such access to provide some protection to Indian industry and services. Germany,for instance,has entered the Indian automobile market with prestigious brands such as BMW and Mercedes Benz,but would gradually like to reduce tariffs to zero. The EU would like to participate in all tenders. Although the introduction of FDI in retail has been accomplished,partnership in the insurance sector is still a major issue. The EU would like to see it raised to 49 per cent,against the current 26 per cent. Agricultural issues have been resolved to a great extent,but there are still fears in India about this sector. The EU is yet to give India the data secure status necessary for cooperation in sensitive sectors. These are the very issues on which the parliamentary committee is agitated.

Germany and the EU,as a whole,tend to go slow with countries that show signs of an economic downturn. India’s dwindling economic growth and the infirm Central government,which is compelled to yield to various kinds of pressures and has to deal with the exposure of corruption and scams,would be a source of anxiety for the EU. Indian foreign policy,too,appears to be hedging. With elections in the offing in India,the EU is likely to wait and watch rather than rush into agreements,unless the concessions offered by India are too attractive to be missed. Against this backdrop,the evident success of the prime ministerial visit to Germany is a feather in his turban.

The writer,former ambassador of India and governor for India of the IAEA,is executive vice-chairman,Kerala State Higher Education Council

express@expressindia.com

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