India, EU face-off over trade treaty
India may reject a proposal by the EU to sign a stand-alone Bilateral Investment Treaty with the bloc, as a precursor to the stalled Broad-based Trade and Investment Agreement. India overhauled its BIT framework last year and served notices to 57 countries, including EU members to renegotiate trade treaties by 31 March. If treaties are terminated, investments from these nations won't have legal protection.
Background to overhauling BIT framework
In Dec'15, the Cabinet approved a new model of Bilateral Investment Treaty (BIT) designed to strike a balance between investor rights, regulatory space and investor responsibilities. This was done as several international firms including Vodafone and Sistema dragged India to court for treaty and impartiality violations. The United Nations Conference on Trade and Development said India has been sued the maximum times for such-violations.
Termination notices sent
In 2015, India sent notices to 57 countries seeking termination of existing BITs and renegotiating under the new model. Of these, 23 are EU members who have individual BITs with India. The EU wants to negotiate a single BIT with India, covering all members.
The India-EU trade impasse
The BITs India had with individual EU-members date back to 1994. However, with the entry into force of the Lisbon Treaty in 2009, renegotiating these treaties bilaterally with EU members is not possible. This can only be done with the European Commission collectively for all states. Hence discussions on the Broad-based Trade and Investment Agreement (BTIA) began in 2013. However, it has remained stalled.
Differences on the BTIA
The BTIA talks have been stalled since 2013 after 16 rounds of negotiations. The EU demands that India reduce tariffs and duties on automobiles, wines and other luxury goods. India in turn demanded more stringent provisions for data security to protect Indian IT companies. India also sought easier visa norms for skilled professionals. Negotiations have since failed to break the deadlock.
What is India saying?
Commerce and Industry Ministry sources said, the countries were given adequate time to renegotiate BITs and failed to. They said, "the ball is in EU's court, not in our court." Another official said "They can still allow individual EU countries to sign BITs with India and we have conveyed it to them. But it is their policy problem that they don't allow it."
EU requests extension
Geoffrey Van Orden, Chair of The European Parliament Delegation for India relations said "It will be helpful if the BITs can be extended for six months. This has become a particular problem within the BTIA talks…But we want India to first give us the extension."
