Don’t use trade for resolving non-trade issues: Kamal Nath

September 28th, 2008 - 2:48 pm ICT by IANS  

Paris, Sep 28 (IANS) India’s Commerce and Industry Minister Kamal Nath has cautioned against the temptation to use non-tariff barriers or non-trade issues to address trade.In an exclusive interview with a special EU-India Summit issue of India & You, a magazine published from here, Nath outlined the relationship with the European Union, one of the blocs that he has had to contend with at the WTO, but also a very important partner for India by virtue of being its largest trading partner.

“India is emerging as a major player in the global manufacturing and services sector. EU is India’s largest trading partner. India and EU are strategic partners. Both are keen to strengthen the bilateral trade relationship through the trade and investment agreement. This optimism is based on the complementarities in bilateral trade which will largely result in a win-win situation for India and the EU, without hurting domestic industry,” Nath said.

“The challenges in the India-EU trade relationship arise from the perception of businesses about the trade retarding effect of standards and regulatory compliances. Trade in goods can be stifled through the requirements to comply with non-tariff measures. Increasingly we hear about proposals in the EU for levy of carbon tax on imports into EU, ban on imports on allegations of labour law violations and use of child labour etc.

“All these issues are unrelated to trade. Any effort to combine trade with other social issues would prove to be disastrous for bilateral trade. This is not to say that we are not open to discussing these non-trade issues. Our worry is on attempts to use trade to address these non-trade issues,” Nath said.

“The challenge in the area of trade in services is the resistance to movement of professionals which is confused with immigration issues. Unless we free up the movement of contractual service providers and other professionals we cannot exploit the potential for increasing trade in services. It is the movement of people related to trade that needs to be addressed without equating it with immigration,” he added.

Nath said the opportunities in the India-EU trade relationship were based on the foundation of strong economic fundamentals of India, complementarities in the economies of both sides, and the changing demographic profile in Europe and India. “These opportunities are being exploited by businesses, which is reflected in the increased two way trade and investment flows,” he said.

Nath said the last year had seen both sides engaging fruitfully in negotiations for a bilateral Broad-based Trade and Investment Agreement.

“Negotiators have to develop a deep understanding of the regulatory and business environment to identify and address barriers to bilateral trade and investment flows. Without this understanding, both sides will not be able to finalise the trade-offs in the negotiations. We hope to see good progress in the negotiations in the coming months,” he added.

Expressing reservations about the market access to Indian products withi the EU, Nath said: “The EU is a large market and yet it can be difficult for our exporters to penetrate because of regulatory differences between individual EU Member States. The lack of harmonisation across the EU market is itself a barrier to exploiting the potential for bilateral trade.”

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