Monday, March 05, 2007

India-EU Trade Talks Suffer Set-Backs

Sources: EU-India Trade Pact Stumbles; India, US, EU Must be Flexible in Trade Talks; EU, US, India Try to Advance Global Trade Talks

Over the weekend, Ministers and negotiators of the European Union (EU) and India held bilateral discussions to push forward contracts that aim to enhance global commerce and combat poverty. However, the talks suffered serious set-backs, particularly India's objections to the "human rights and democracy" provision in a proposed free trade agreement with the E. India's commerce minister, Kamal Nath, indicated the significance of this clause by calling it a "deal-breaker." India's objection is based on the fact that this is supposed to be a trade and investment agreement only, and that this clause injects elements into the agreement that lie outside the relevant subject matter of the contracts. India has a longstanding policy of preferring economic agreements that did not come with political contingencies.
The groups are under pressure to reach a deal - and soon. Some of the negotiators claim that a deal must be reached this year or else the increased risk of long-term delay would undermine confidence in the global trading system. The talks were part of the discussions entered into after the 9/11 attacks on the U.S. in 2001 as an effort to take a rare opportunity to bind the global community in a united effort to lift millions out of poverty and boost the global economy. India is one of the EU's largest trading partners.
The clause in question is what the European Commission refers to as part of the "essential elements" clause that is standard in all its bilateral trade agreements. This clause is in agreements between the EU and over 120 countries. India has been suspicious of such clauses because of the protectionist bent they convey.

1) What could be some reasons that motivate the EU's inclusion of its "essential elements" clause in trade agreements?
2) What does India stand to lose if it signs the agreement with the clause intact? What does it stand to gain by having the clause striken from the agreement?
3) What does the EU stand to lose if the clause is striken from the agreement?
4) Who else might gain or lose if the clause remains in the agreement?

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