Trade winds: high-stakes EU-UK free trade deals extend wishlists

Experts also suggested that in their negotiations, the two sides should first work on less controversial issues. Subsequently, innovative solutions must be put in place to get out of log logging in more contentious cases.

As India prepares to launch formal negotiations with the UK and the EU on this tax for free trade agreements (FTAs), domestic players are rushing to submit demands for better market access for hundreds of products, textiles and clothing on the wish list of most stakeholders. sources told FE.

Exporters body Apex alone has submitted to the government a list of 240 products – ranging from textiles and pharmaceuticals to engineered products – in which it wants the UK to cut tariffs. Government officials draw up a full list of items for the talks. This includes electrical machinery, capital goods, automotive components, organic chemicals, leather, shoes, and toys, among others.

The Textile Department is advocating for duty-free access to textiles and clothing, which respectively accounted for 19% and 14% of India’s exports to the UK and the EU, in the last fiscal year. Textile Secretary UP Singh told FE that including these products in planned FTAs ​​will certainly boost Indian exports. However, the government will take a “balanced view” when entering into negotiations, keeping in mind the interests of all stakeholders, he added. The EU imposes up to 9.6% tariffs on Indian textiles and clothing, while least developed countries like Bangladesh and Pakistan enjoy duty-free access.

The Apparel Export Promotion Council and Confederation of Indian Textile Industry also want these products to be part of the early negotiations. Likewise, other export organizations are seeking easier access to dozens of products, relevant to the sectors they represent.

However, others, mainly in the dairy and agricultural sector, do not want the government to initiate tariff reductions on these products.

Since its withdrawal from the Beijing-dominated RCEP trade talks in November 2019, India has sought to accelerate negotiations with key economies. But he made it clear that any trade deal will have to be “fair” and “balanced”.

While negotiations with the UK may be concluded relatively soon, those with the EU will be a long-drawn-out process, given the complexities associated with the 27-member bloc, officials from the Department of Commerce said.

Nonetheless, New Delhi will attempt to strike an early harvest deal with London, based on issues where consensus can be easily forged. This would be followed by a more comprehensive FTA.

Likewise, as FE reported, the resumption of negotiations with the EU after a hiatus of more than eight years could see both sides focus first on the ‘fruits at hand’, before moving on to contentious issues that had hampered talks earlier.

Government officials are also studying the EU’s negotiations with China for an investment deal and its FTA with Vietnam for meaningful talks.

After 16 rounds of talks between 2007 and 2013, formal FTA talks remained stuck on glaring differences as the EU insisted India remove or reduce import duties on sensitive products such as automobiles, alcoholic beverages and cheese, among others. India’s demand included better access to the EU market for its skilled professionals, which the bloc was reluctant to join.

Since 2013, however, the situation has changed dramatically with Brexit, and the attractiveness of the EU as a large market has eroded somewhat. Nevertheless, it remains an important commercial destination.

India’s exports to the EU, excluding the UK, fell 8% in the wake of the pandemic to $ 41.4 billion in FY21, which is 14 , 2% of the total outgoing merchandise shipments from the country. Likewise, its exports to the UK fell 7% to $ 8.2 billion last fiscal year.

India’s top exports to the EU in FY21 were textiles and clothing ($ 5.6 billion), organic chemicals ($ 4.2 billion), iron and steel and related products ($ 3.9 billion), mineral fuels, etc. ($ 2.9 billion) and pharmaceuticals ($ 1.9 billion). Its exports to the UK included textiles and clothing ($ 1.6 billion), gems and jewelry ($ 744 million), electrical machinery ($ 565 million), pharmaceuticals (618 million) and automobiles ($ 244 million).

Experts also suggested that in their negotiations, the two sides should first work on less controversial issues. Subsequently, innovative solutions must be put in place to get out of log logging in more contentious cases.

For example, Arpita Mukherjee – a professor at Icrier specializing in trade and investment – proposed a threshold price for alcohol for tariff liberalization, as Japan did for Australian wines under the RCEP.

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