Handbill - 30 April 2010 Protest

India’s Secret Free Trade Agreements: Why and for Whom?

SAY NO TO FTAs, TODAY!

In June 2007, the European Commission and the Government of India (GoI) started negotiating the EU-India Free Trade Agreement (FTA). India’s Free Trade Agreement (FTA) with this 27-European country bloc will impact every aspect of our existence. It will mean a massive slashing of our import duties (up to 95% of all goods produced) and include trade in services, priority to investor rights, tighter intellectual property standards, unfair competition policy and restricted government procurement. Any domestic safeguards even in national lawss and policies coming in the way of European trade interests and India’s political and financial elites will be swept aside, putting at risk the lives and livelihoods of working people and resource-dependent communities.

FTAs create legally binding obligations on the government. FTAs not only open up trade in goods but also open up the trade in services, investment and intellectual property rights far beyond the WTO requirements and severely affects food security, livelihoods and access to key services. The GoI is yet to articulate its strategy behind negotiating these FTAs. The ASEAN-India FTA was signed without Chief Ministers of different states seeing the offer of goods to ten ASEAN countries. The Korea-India FTA was signed in complete secrecy in August 2009. Many of the subjects that the GOI is negotiating are state and concurrent subjects in the constitution, yet consultations with states and the parliament has been neglected. Both the GOI and the European Commission have consistently refused to share information with civil society groups and the general public undermining the basic tenets of democratic process, policy making and law. Though there was much resistance to TRIPS and Investment and Government Procurement clauses within the WTO framework, many of the FTAs that India is negotiating include TRIPS plus as well as clauses for liberalisation of Investment and Government Procurement, but given the nature of the negotiation of these FTAs civil society and mass organisations have been kept out of the picture.

Major issues of concern in the EU-India FTA:

  1. Impact on livelihoods: The EU-India FTA will ensure a reduction of 95% of import duties of India to zero or close to it while leaving the heavy subsidies on European agricultural goods unaffected. This will hit the Indian agricultural sector hard impacting lives and livelihoods dependent on it. In addition the services and investment chapter of the FTA will make the entry of European agro-processing and retail firms easy thereby impacting how food is produced and sold in our country. Small and marginal farmers in India will be pitched against the power of multinational retail firms.
  2. Access to minerals opened for EU: India is the third largest producer of “metallic minerals” including “chromite” and other “rare earth” minerals and currently restricts exports of iron ore and non iron metal scraps. The EU-India FTA will be one of the key avenues for obtaining access to these natural resources both through targeting our export restrictions and through the investment provisions in the FTA.
  3. Revenue losses: Our import duties are higher in comparison to the EU. India’s average import duties are 32% for agriculture and 10% for industrial and fisheries imports. Import duties are also the easiest way of collecting taxes for the government since goods cannot enter without the necessary duty. However, the EU India FTA along with the others that the government is negotiating will create a major loss of import duty income for the government and affect our national budget. This in turn is likely to have serious impacts on Government spending in social sectors like education and health.
  4. Expansive liberalization in services and investment: Europe’s multinational companies dominate global services trade and investment. The EU is pushing for a broad definition of investment that can include “every kind of asset” such as “movable and immovable property,” stocks, intellectual property rights and concessions to search for minerals. Such a broad definition of investment could commodify and thus put to risk virtually every kind of national asset. Moreover, with a change in European governance due to the Lisbon treaty, the European Commission may have greater powers to negotiate investment. This may mean that an “investor to state” clause, whereby a European company has the right to sue the Indian government in case of loss of predicted profits, may be part of the FTA negotiations. The EU’s services and investment liberalization formula is WTO plus and as stated above virtually affects all public services and national, state and local laws that are seen as barriers to free trade.
  5. TRIPS-plus intellectual property protection: The EU’s demands for TRIPS-plus intellectual property (IP) rights would lead to legislative and policy changes in India with regard to the scope of IP protection and enforcement. For instance, the EU is likely to demand that India accede to the ‘International Convention for the Protection Of New Varieties Of Plants’ (UPOV 1991) or at least comply with a system of plant variety protection that favours plant breeders’ rights over farmers rights to seeds. India would then have to change its Protection of Plant Varieties and Farmers’ Rights Act 2001 to adjust to this demand. This would not only cause cost of commercial seeds to shoot but also severely affect biodiversity. TRIPS plus provisions also intensify monopolies over seed, pesticides, fertilisers and animal vaccines and encourages proprietary agriculture technologies – such as GM crops and fish. It would also threaten India’s access to affordable medicines by limiting the ability of the Government to issue compulsory licenses on medicines. It will also reduce access to knowledge and pose a threat to traditional knowledge.
  6. Liberalising Government Procurement: The EU is also insisting that government procurement which accounts for nearly 13% of India’s GDP be opened up to EU companies. Government procurement helps revive under-developed economic regions, boosts domestic production and thus helps fight against economic recession in the country. Government contracts can also help support Small and Medium Enterprises, marginalized constituencies and poorer states by channeling money through local firms for goods and services. Opening this sector to powerful European companies takes away these necessary tools for dealing with economic recession and fostering development of marginalized constituencies and regions.
  7. Advantage to EU MNCs through ‘effective competition’: Competition law and policy is also part of the negotiations with the EU. The EU is reportedly demanding that India’s competition policy should provide ‘effective opportunity for competition’ in the local market thus helping big EU-based multinational corporations. The EU may further attempt to harmonise India’s competition law with EU competition law thus reducing the flexibility required for India to design a competition law and policy suitable for its economic development.

The present free trade and investment policies are proving to be highly costly to citizens worldwide. It is of grave concern that the EU-India FTA negotiations till date have been marked by a gross absence of transparency and public debate. There is an urgent need for an informed public debate on the feasibility and development outcomes of the GOI’s FTA strategy as a whole.

The Commerce Ministry hopes to Conclude the EU-India FTA by October 2010.

STOP EU –India FTA Negotiations till:

  • All existing negotiating positions, and government commissioned studies are made public and debated in public fora.
  • All current proposals, negotiating drafts are debated and discussed in parliament and with state governments and a consensus is reached;
  • Consultations are conducted with key stakeholders – representatives of trade unions, farmers, women, dalits, adivasis, health groups and other peoples organizations, small and medium enterprises, cooperatives and hawkers.
  • A white paper is released and discussed in Parliament on the cumulative socio-economic and ecological impacts of all FTAs that the GOI is negotiating, especially addressing social inequality and discrimination. A separate white paper on the EU-India FTA.

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