People's Democracy

Stop This Indo-EU Free Trade Agreement

The Polit Bureau of the Communist Party of India (Marxist) issued the following statement on April 5, 2013.

THE Communist Party of India (Marxist) expresses deep concern that negotiations on the Bilateral Trade and Investment Agreement (BTIA) between the European Union and India have proceeded without any due scrutiny by parliament or other democratic institutions. We understand that there is a move to conclude the negotiations by the middle of April.

The free trade agreement (FTA) with the European Union is the most ambitious and comprehensive of all FTAs that India is negotiating or has signed. Its impact on the economic and social fabric of the country could well be deep and long lasting. The agreement is likely to worsen the already burgeoning current account deficit and trade deficit. Evidence from trade agreements that India has already entered clearly indicate that they further worsen the country’s trade deficit. For example, in the case of the agreement with Singapore a trade surplus was rapidly converted into a deficit after the signing of the FTA.

The intellectual property, investment and government procurement chapters of the agreement will have a negative impact on virtually every area of economic activity, including agriculture, industry and services. Higher standards of intellectual property protection will have a negative impact on health services; strong investor protection mechanisms will undermine the government’s ability to regulate industrial and financial corporations in national interest; and the opening up of government procurement to foreign firms will undermine even the minimal social protection measures in place, such as the public distribution system. The agriculture sector is likely to be particularly affected by the dumping of subsidised agricultural products from the EU.

Several sections representing different sectors of the economy have already articulated serious concerns about the impact of the FTA. The automobile industry is likely to be seriously affected. Amul, India’s largest milk cooperative, has similarly expressed concern regarding the impact of subsidised dairy imports from the EU that can jeopardise the livelihood of 80 million farmers in India.

Claims that the FTA will open up additional markets for Indian exporters are unsubstantiated and are not, in any case, going to compensate for the expected surge in imports. The EU can be expected to continue with its strategic use of subsidies and non-tariff barriers to prevent the entry of Indian exports.

The CPI(M) is particularly concerned that the entire negotiating process has been non-transparent, with a total lack of public consultation with affected sections, parliamentary oversight, or the involvement of state governments. Despite repeated expressions of concern by political parties including the CPI(M), the government has moved forward with the process, shunning even a modicum of effort to arrive at a political consensus on the issue. The parliamentary standing committee on commerce is examining the impact of FTAs but the government’s determination to sign the EU-India BTIA without waiting for the committee’s report betrays a shocking disregard for parliamentary democratic institutions.

The CPI(M) demands that the government should not conclude the negotiations at this stage and should instead:

1) wait for the report of the parliamentary standing committee;

2) conduct a parliamentary debate on the issue;

3) hold public consultations with all affected groups;

4) share the texts of the current negotiating process and conduct, on their basis, impact assessment studies.