Context
This editorial is based on the news “A fresh stance: On India and the European Free Trade Association deal” which was published in The Hindu. India signed a Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA).
| Relevancy for Prelims: European Free Trade Association (EFTA), Provisions of Trade and Economic Partnership Agreement (TEPA), Data Exclusivity, India’s trade pacts strategy:
Relevancy for Mains: Bilateral, regional and global groupings and agreements involving India, Bilateral Agreements, Regional Groupings, Global Agreements, Impact on Economic Diplomacy, Challenges and opportunities associated with the India-European Free Trade Association agreement, Impact of Trade and Economic Partnership Agreement (TEPA) |
India-EFTA Trade Agreement: A Long-Awaited Milestone in Bilateral Relations
- European Free Trade Association (EFTA): Iceland, Liechtenstein, Norway and Switzerland are formally known as the European Free Trade Association (EFTA).
- Timeline: The agreement, in development since 2008, took 21 rounds of talks over 16 years for India and the European Free Trade Association (EFTA) members to finalise.
Key Provisions of the India-European Free Trade Association Trade Agreement: Boosting Investment, Employment, and Market Access
- Commitment on investment and Employment: This is the first FTA for India where it has been able to get a commitment on investment and employment from the partner nations.
- Visa Facilitation for Indian Service Firms: In market access terms, the deal offers more room for Indian services firms, with easier visa rules, so that they can also tap other European markets using these countries as a base.
- Professionals (architects, accountants and nurses), can also expect more opportunities.
- Commitments of $100 billion of fresh foreign direct investment into India and Creation of a million jobs over 15 years: Most goods exports already get duty-free treatment in Switzerland, India’s largest European Free Trade Association trade partner.
- However, the TEPA deal is significant as it commits to creating $100 billion of fresh foreign direct investment into India and creation of a million jobs over 15 years.
- Exclusion List: Sectors such as dairy, soya, coal, gold Imports and sensitive agricultural products are kept on the exclusion list and there will not be any duty concessions on these goods.
- Cheaper Products: Indian consumers can expect cheaper wines and chocolates, while producers may access cheaper machinery.
- Data Exclusivity: India rejected demand for the pact to include provisions on data exclusivity.
The Significance of India’s TEPA Deal with EFTA: Addressing Data Exclusivity, Trade Priorities, and Strategic Shifts
- Speedy Negotiations: India’s swift sealing of the European Free Trade Association deal after resuming negotiations is commendable.
- Second major trade pact of India: The deal with European Free Trade Association marks
- India’s second significant trade pact following the deal with the United Arab Emirates and
- It is the first with a Western nations grouping.
- India’s priority to Trade Pacts:
- India exited the Regional Comprehensive Economic Partnership (RCEP) to protect the interests of industries like agriculture and dairy.
Data Exclusivity in Pharmaceutical Regulation
- It is a form of intellectual property protection that applies specifically to data from pharmaceutical clinical trials.
- It means that all the data generated during testing the safety and efficacy of a drug which generally is in public domain, now becomes exclusive to the company
- The exclusivity rules keep generic firms from relying on the clinical trials data of the original pharma company for 5 to 12 years, depending on the specific country law.
- It operates independently of patent protection and can block generic manufacturers from gaining marketing approval.
- Monopoly: No generic drug can be approved during the period of data exclusivity resulting in a monopoly for the new drug product. Data exclusivity cannot also be challenged unlike patents.
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- Gives a positive signal in the era of Protectionism: Despite past criticism for high import tariffs and protectionist policies, India appears ready to embrace free trade, even as many nations are becoming more protectionist.
- First time inclusion of Non Trade issues: The European Free Trade Association pact marks the first time that India has agreed to include non-trade issues such as labour, human rights, environment and gender in an economic agreement.
- Secure Supply Chains: Trade agreements can provide India with a more stable and diversified supply of critical raw materials and resources, and integrate India into global value chains, participating in different stages of production.
- The disruption of supply chains during the pandemic exposed the risks of over-dependence on China, and the need for a ‘China-plus one’ policy.
- India as a potential alternative has been looking at trade deals with the UK, Australia, and EU, etc.
Conclusion
The India-European Free Trade Association agreement promises substantial economic benefits, including enhanced supply chains, expanded business opportunities, increased trade and investment, job creation, and economic growth.
March 14, 2024
