Improving the EU-India Trade Agreement

casaca1EU-India negotiations on the Bilateral Investment and Trade Agreement (BITA) which started over five years ago have stalled on a variety of issues of diverse nature and impact, with the last deadline for conclusion (November 2012) elapsing without significant advancement.

The European Union and India are the biggest democracies in the world. Different in many respects, they must be considered to be on a rigorous equal footing in order for any solid agreement to be achieved. Both of them are confronted with economic and political challenges of different natures but these could be much better confronted in partnership rather than in isolation.

If we take this approach, and if we therefore consider political agreements such as conventions and observation clauses in human rights to be based on such a rigorous equal footing, most of the existing difficulties can be put aside. Both India and Europe have vibrant and critical civil societies, and the establishment of talk shops where these organizations could freely interact on the critical appraisal of whatever issue might be on the table at the time would certainly be accepted as a sound basis for two open democratic societies to relate to each other.

Naturally, this also implies a need to inscribe all human fundamental rights on the basis of such an agreement, such as the right to life, materialized in food or health care security. No trade solution or scheme could be envisaged if it would not respect these principles. For instance, any rule that would place existing pharmacological products out of reach of poor citizens should be taken off the negotiation table.

It also means the European Union should understand that the implicit suggestion of any moral or civilization European superiority – incidentally, a notion that has more to do with ignorance of India than anything else – would be sufficient to ruin any possible agreement.

The European Parliament has threatened to introduce a clause regarding Jammu & Kashmir, a principality whose partition was not settled after independence and is now occupied or administered by China, Pakistan and India. This clause, awkwardly, was never raised with the other parties to the dispute when the European Union concluded trade arrangements with them.

Whereas the United Nations position on the issue is for all sides to organize a referendum – and none so far has shown any interest in doing so – the overall security, political and economic situation seems to redress itself slowly but steadily in the Indian part of the border, while in the Sino-Pakistani side, conflict and mass murder of religious minorities and tension with Chinese forces are mounting, most in particular in Gilgit-Baltistan.

Otherwise, if there is an open issue of nationalist rebellion where no peaceful solution is on the horizon and where a dirty war on a vast scale is rising, then it is in Balochistan on the Western side of Pakistan, but this has never been mentioned in any trade negotiations with the EU. The bowing to lobbying pressures and vested interests such as those of an expatriate community in one EU member state should not be the concern of European Union external policy.

The European Union also has many territorial disputes either within its own borders or with its neighbors

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Would the United Kingdom find it reasonable for India to demand that it sort out the dispute over Gibraltar with Spain before accepting a trade agreement? If not, then why does it demand a similar step from India? The same could be asked of the city overlooking Gibraltar: should third parties demand that the European Union settle the dispute with Morocco over Ceuta in the context of bilateral agreements?

The second major political hurdle stemming from this superiority complex is global warming, where once again the European side positions itself on a pedestal overlooking an India that refuses to adapt carbon emission objectives, presumably because its people are deemed to be unable to understand the high moral standards of the European side of the argument.

Whereas Europe has embarked upon schemes of utter complexity and dubious practicability such as energy cross-subventions and carbon emission permits trading – thought up by Al Gore in an era when auctions seemed to be the universal answer to all human problems – and decided to impose them unilaterally in the foreign air space, it has neglected the supply side of the issue, investing too little in fundamental and applied research on intelligent energy solutions.

For its part, India has been unable so far to dismantle or at least to phase out its huge subventions to fuel and fertilizers that encourage energy waste. This would certainly be a simpler and more efficient way to diminish carbon emissions than carbon trade schemes whose implementation has been heavily twisted by vested interests.

Fundamental and applied research, coupled with ways to curb disincentives and promote incentives to intelligent energy, could be the means by which co-operation could contribute more to face fundamental problems for both sides – energy dependence and emissions with hazardous climatic impact – as well as to create employment and business opportunities while addressing vast environmental, health, energy and food problems.

A third and final stumbling block has been the growing protectionist sensitivity on both sides of the negotiation table, easily understandable if we take into consideration the fact that the calendar of the negotiations has coincided with the global economic crisis. The only reasonable solution here is to consider strengthened and more frequently enforceable safeguard clauses.

Economic equilibrium in the agreement is a fundamental requisite for a fully successful negotiation between the EU and India.

Last but not least, trade is a very convenient instrument to start overcoming the conflicts that are currently disrupting South Asia. The EU-India BITA should be seen as the first step towards an EU-SAARC (South Asia Association for Regional Co-operation) agreement. The EU would gain much more that way than by unnecessarily fueling confrontations on issues such as Jammu & Kashmir.

Paulo Casaca, founder and executive director of the Brussels-based NGO Alliance to Renew Co-operation among Humankind, has been a MEP from 1999 to 2009 and a Councillor of the Portuguese Permanent Representation from 1996 to 1999. He has taught economics at the University of the Azores and the University of Lisbon, and has served as an economics adviser to the Socialist Group in Portugal. Paulo was a member of the Portuguese National Parliament and the Azorean Regional Parliament. Read other articles by Paulo.