Memorandum 30 April 2010

Shri. Anand Sharma
Minister for Commerce and industry
Government of India
Udyog Bhavan
New Delhi

Dear Sir,

We are writing to you to express our serious concerns over the EU India Free Trade Agreement (FTA), as this FTA with the 27-European country bloc will impact critical aspects of the Indian economy and people’s lives. We note with grave concern that the GOI’s numerous FTAs under consideration cover areas that fall within the state and concurrent list, but the GOI has ignored and sidelined the parliament, state governments, citizens of India including farmers, workers, womens’, dalit and adivasi groups who have not been consulted in the process of FTA negotiations. No consultations, public discussion of the pros and cons, release of government studies, government positions and submissions have taken place with these constituencies. This makes a mockery out of the federal polity and the democratic ethos of India.

Repeated requests for consultations access to information and genuine discussion in the parliament and the states on the FTA have gone unheard. 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.

The EU-India FTA raises several key concerns with regard to peoples’ livelihoods and an just economic development strategy for the country that is now considered “emerging”:

  1. Impact on livelihoods: The EU-India FTA will ensure a reduction of 90% of Indian import duties to zero on day one of implementation, 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, processors, distributors and retailers in India will be pitched against the power of multinational retail firms.
  2. Financial Liberalization will make us vulnerable to Financial Crisis: FTA demands in finance would make it difficult to control the rapid influx and exit of risky investors, a major reason for financial crises in Asia and around the world. In the wake of the global financial crisis, a serious rethinking on opening financial services must take place. The crisis has delegitimized the “best practices” of European banks and calls for expansion of domestic regulatory space which FTAs restrict.
  3. 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, exacerbating land struggles in the country.
  4. 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 and the proposed National Food Security Bill.
  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. India’s Protection of Plant Varieties and Farmers’ Rights Act 2001 is therefore under threat. TRIPS plus provisions intensify monopolies over seed, pesticides, fertilisers and animal vaccines and encourages proprietary agriculture technologies – such as GM crops and fish. India’s access to affordable medicines, the Government’s ability to issue compulsory licenses on medicines will be severely affected.
  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 has the potential to revive under-developed economic regions, boosts domestic production and help fight against economic recession. 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.
  7. Giving Up Our Policy Space for No Clear Gains: The EU is negotiating 108 FTAs or Economic Partnership Agreements. It has numerous “non trade barriers” in both goods and services. Giving “substantial” concessions in the FTA when any preferential treatment from the FTA will be quickly eroded makes no sense. We are not likely to bring down EU’s non-trade barriers. The costs significantly outweigh the benefits.

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.

We request you to immediately:

  1. Stop all FTA negotiations until there is public consultation.
  2. Release all information, studies and negotiations on the EU-India FTA and all other FTAs being negotiated or in consideration.
  3. Issue a white paper on the GOI’s FTA strategy in parliament on the cumulative socio-economic and ecological impact, especially addressing social inequality and discrimination. A separate white paper on the EU-India FTA and other North-South FTAs is also requested.
  4. Complete a federal process of consultation with the state governments, including the sharing of draft texts, and reach a consensus with the states.
  5. Set up a process for Parliamentary and State Legislatures’ approval before FTAs are signed.

Yours Sincerely,
Forum Against FTAs

Copy to:

  1. Shri. Manmohan Singh, Honurable Prime Minister of India
  2. Shri. Pranab Mukherjie, Honurable Minister for Finance

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