India and EU should firm up FTA to offset concerns over OBOR

NEW DELHI: Common concerns over China's mega 'Belt and Road' initiative should make India and the European Union resume talks immediately on the long-pending free trade agreement, Germany said today ahead of Prime Minister Narendra Modi's visit to Berlin.

German Ambassador Martin Ney said the issue is likely to figure during talks between Modi and German Chancellor Angela Merkel next week.

Strongly pushing for resumption of dialogue on the India-EU free trade agreement, Ney said the proposed pact has strategic ramifications and both sides should try to finalise it soon when a China-centric trade system is being pushed forward.

India had boycotted a summit on the ' One Belt and One Road' ( OBOR) initiative in Beijing on May 14-15, while several European countries had participated in it but did not sign the trade declarations citing absence of consultation process in finalising it.

"India has not participated in the OBOR summit. The European countries have participated but have not signed the trade declaration of OBOR.

"If both India and EU have certain hesitations about it (OBOR), then it should give us extra incentive to sit down and resume negotiations on the FTA. It is a good reason to resume negotiations as soon as possible," he told reporters.

He also criticised China for adopting a "top down" approach while promoting OBOR, calling it a China centric trade enhancing system.

He said the initiative is of one country, adding OBOR is very much different from the Silk route initiative which had a "bottom up" approach.

The envoy said it was time the EU and India, with enormous trade involvement, make it a point to speak up for future and look for an FTA, which is officially called EU-India Broad-based Trade and Investment Agreement (BTIA).

"In the last inter-governmental consultations (in 2015), Prime Minister Modi and Chancellor Merkel spoke out strongly in favour of resuming FTA negotiations. But it has not happened," Ney said.

Modi will hold the 4th inter-governmental consultations with Merkel covering bilateral and global issues during his two-day visit to that country beginning Monday. Ney said the issue of OBOR may figure in the talks.

The German ambassador said India's investment protection treaties with a number of European countries including with Germany have expired, and in absence of them, investments from Europe to India do not have institutional protection. He said firming up of the FTA will address the issue.

The talks on FTA, launched in June 2007, have been stalled since May, 2013, when both sides failed to bridge substantial gaps on crucial issues, including data security status for IT sector.

The European Union, earlier this year, had pressed India to extend by six months its bilateral investment pacts with EU-member countries, saying absence of the treaties could adversely impact trade ties and FTA talks.