Apparel Sourcing Intelligence - Worldwide

India halts EU free trade talks. Again

India announced on August 5 that it had decided “to defer for the present” the resumption of free trade negotiations with the EU over a dispute about pharmaceutical exports.

Negotiations began in 2007, but have made little progress and the last negotiations were held in May 2013. India’s mid-2014 elections made any progress impossible on key areas of disagreement such as  cars, car parts, services, wines and spirits, pharmaceuticals and public procurement – though there has been general agreement on duty-free access to the EU of garments and textiles.

EU Trade Commissioner Cecilia Malmstrom said in early August that two sides would hold a “stocktaking meeting”  to assess whether there was sufficient “ambition” to restart the trade talks. This plan was abruptly halted by the Indian government in protest over EU restrictions on marketing 25 generic drugs whose safety record depended on disputed clinical trials conducted by India’s GVK Biosciences.

France’s watchdog inspected a GVK Biosciences manufacturing plant in southern India during 2014 and found manipulation of data from electrocardiograms for at least five years. Several large Indian drugmakers had in the past two years faced US and British sanctions over issues ranging from data fabrication to sanitation. India denies the French charge and has refused any corrective action, so in July the EU implemented the ban on GVK-approved drugs announced in January.

EU official reaction has been muted.  Some Indian commentators have called India’s decision “broadly consistent with the typical dilly-dallying stance adopted by the country during world trade negotiations, with nationalism, almost always, being used as the alibi for the protectionist stance:” one European commentator saw the Indian decision as support for British exit from the EU as “the only way for the UK to strike an ambitious FTA with India.”