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India raises issue of GSP concession to Pak with EU

Agencies - New Delhi

India has raised the contentious issue of higher GSP concessions to Pakistan with the visiting EU trade commissioner Mr Pascal Lamy.

“The issue came up for discussion among other issues,” Mr Lamy said, after his meeting with commerce and industry minister Mr Arun Jaitely here. India has expressed concern time and again over EU’s zero import duty on garments from Pakistan under the generalised system of preferences on the ground that it had successfully fought drug trafficking. New Delhi wants that EU should extend similar concessions to India as it had made huge efforts to contain drug trafficking.

Due to zero import duty on Pakistan garments, the export of Indian garments to EU nations suffered an estimated loss of US$ 300 million in a year. Ahead of the crucial Cancun WTO ministerial in September, this meeting was overshadowed by multilateral issues with both sides trying to seek commonality of views on some areas, though some bilateral issues did figure in the meeting.

“We discussed a large number of bilateral and multilateral issues to try to look for areas where we could be convergent, especially in the wake of the Cancun ministerial,” Mr Jaitely said.

Mr Jaitely said both India and the EU shared similar stand on various issues including market access for agriculture goods and medicine, TRIPS and textile quotas but added that there were differences in some areas. When asked, Mr Lamy said there were some differences regarding Singapore issues. EU, India convergence of views on TRIPS and market access of agri products assume significance as these had hit a road block in the recent mini-ministerial in Tokyo.

The European Union has also assured India that it stood by its commitment to phase out quota for textiles by the end of 2004. “We are fully committed to doing away all quotas for textiles by end December 2004,” the European Union trade commissioner Mr Pascal Lamy told reporters after meeting with commerce and industry minister Mr Arun Jaitely here.

While the US has also assured to support phasing out of all textile quotas by 2004, the EU assurance assumes significance in wake of some countries’ attempt to get this deadline extended further. On phasing out of import restrictions, Mr Lamy said both the sides were working on it and the list of items which were restricted for imports was shrinking. The EU had earlier given a list of 100 items to India on which it wanted New Delhi to phase out import restrictions.

He said trade barriers of poor countries against one another are significant restraints on their own development and more significant than those imposed by the rich ones. It results in developing countries foregoing enormous market opportunities. To ensure effective export growth for the developing countries, trade barriers of both developed and developing countries need to be tackled together. Mr Lamy stressed on the ‘rules’ part of the WTO negotiations and said they must not restrict development. Rules secure market access and sincrease trade.

Since the conclusion of the Uruguay round of trade talks, India’s exports have doubled. Their share of world trade grew by 40 per cent. Since the 1980s, Indian exports to the EU, its largest trading partner, have increased by an average 10 per cent annually. Total EU imports from India are now at Euros 13 billion, more than five billion above those of 1995. Mr Lamy said India presumably was worried that tariff rate quotas on textiles will be replaced by trade defence actions after the end of 2004. He said to avoid such action WTO rules should be firmed up by tightening the scope for countries to do this. Similarly WTO rules for investment are a matter of crucial interest.

Foreign direct investment is recognised as one of the key factors in economic growth. India needs more long-term foreign direct investment to meet and pursue its development needs and priorities. Such investment needs a stable, transparent, predictable and non-discriminatory climate. In this area, India can use locking in these reforms at the WTO as a bargaining chip to get other countries to open up and send a strong signal to foreign investors that there is a transparent framework in place here. He stressed upon the need to create a stronger link between rule making and development aid or provision of resources.

On the Doha Development Agenda (DDA) he said the differences between India and the EU are not impossible to bridge, the two need to shape consensus and build on natural convergencies. Trade facilitation could easily be a domain which would improve the economies of scale, he stated. “It doesn’t cost anything to replace three files by one.” The issue was not one of infrastructure, he said, adding by facilitating trade “you are making money out of that. It’s good for developing country.”