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Trade rows to bristle at EU-India summit

world Updated: Dec 09, 2010 09:27 IST

India faces off on trade with its leading partner, the European Union, at a summit slated to make headway this week on four years of stalled negotiations, but set on a collision course on Pakistan.

Prompted by Britain, the EU is offering Pakistan three years of trade concessions to help recovery from devastating floods in the extremist-plagued state -- but needs a waiver from the WTO in Geneva to kickstart the aid.

"India is not sure trade is the best way to address issues related to relief," an Asian diplomat said ahead of Friday's EU-India summit.

Addressing fears this could prompt Delhi to block trade-linked aid to Islamabad at the 153-nation World Trade Organization, an EU source said: "We understand the concerns, but are ready to discuss this."

"We are very committed to this initiative," he added, "and we hope India will be ready to support it."

Counter-terrorism and security in a region where India has a pre-eminent role will feature prominently at the talks Friday between Prime Minister Manmohan Singh, EU president Herman Van Rompuy and European commission president Jose Manuel Barroso.

With India heavily involved in aid for Afghanistan, including building the Kabul parliament, the situation there as well as in Pakistan and Myanmar, which shares a troublesome border with India, feature high on the agenda.

The 27-nation bloc sees the talks with the emerging power as a chance to discuss global economic recovery but will have to address "concerns in India that the world would be hurt economically if eurozone problems expand and engulf other countries" after Greece and Ireland, an Indian source said.

But trade looks set to be the over-arching theme.

Both Delhi and Brussels had hoped this 11th yearly summit would deliver a much-anticipated free-trade agreement, or FTA, which India reckons would boost annual bilateral trade by over a quarter in five years to 100 billion dollars.

"We have not frozen a day for it," trade minister Anand Sharma said of the FTA deal days before the summit.

Despite squabbles over tariff cuts as well as rows over child labour and the environment, both sides are reporting progress in the trade talks, with Sharma hoping for a deal "before Easter" and an EU diplomat for "the spring".

The EU wants greater access to legal, banking and retail sectors in India despite legislative hurdles while India is eyeing software and IT access but is concerned about migration policies in Britain, Germany and the Netherlands.

Meanwhile the European Parliament is insisting that rules on social and environmental issues be made part and parcel of the FTA, while India argues that labour laws and climate change issues are covered by other world bodies.

"Why should a trade agreement refer to such matters?" said an Indian diplomat, who asked to remain anonymous.

On other issues, the summit is expected to deliver an accord on culture as well as settle a dispute over seizures of generic Indian drugs in the 27-nation bloc.

India and Brazil last May issued a legal challenge against the EU at the WTO after several shipments of generic medicines were seized or delayed at EU ports.

And India is expected to use the forum to whip up support for its claim to a permanent seat on the United Nations Security Council.