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Statement by India delivered by Ambassador & PR to the WTO at Trade Policy Review of European Union on 18 February 2020

Trade Policy Review of the European Union

18 February 2020 

Statement by India – Delivered by Ambassador & PR to the WTO

I join others in extending a warm welcome to the delegation of the European Union for the 14th Trade Policy Review and thank DG Trade Sabine Weyand for her detailed Opening Statement. I would also like to thank Ambassador Alexandre Parola of Brazil for his observations as the discussant, and the officials from the Secretariat and the European Union for the comprehensive reports prepared for the review.

2. The EU is India’s largest trading partner, accounting for more than $107 billion [€92 billion] worth of trade in goods in 2018. India is now the 4th largest service exporter to the EU and has become the 6th largest destination for EU service exports.

3. The EU continues to be one of the largest sources of Foreign Direct Investment (FDI) for India with EU FDI stock of $81 billion [€73 billion]. There are over 6000 EU companies operating in India. In order to facilitate investment flows from the EU, an Investment Facilitation Mechanism was established in July 2017 for close coordination. Negotiations of the Bilateral Trade and Investment Agreement (BITA) between India and the EU are at a standstill since 2015. Its early finalization will open up even greater opportunities for trade and investment.

4. Given the status of EU in our external trade, we attach great importance to this TPR. We had posed over 100 questions in advance to the EU delegation. I wish to highlight some specific concerns which affect the vast underlying potential of the trade between India and EU.

5. As noted in the previous Review, we would like to again reiterate our systemic concern regarding EU's trade policy which include the diverse and complex nature of applied tariff rates within the EU, non-ad valorem duties mostly in agriculture, tariff quotas and significant tariff escalation and peaks in areas such as textiles and agriculture where developing countries like India have interests. Of the non-ad valorem tariffs, about one third are compound, mixed, or other, and it is often difficult to determine the duty rate or calculate the real impact of the tariff. Complex tariffs act as barriers to trade and we urge the EU to accelerate the process of shifting towards ad valorem tariffs because tariff simplification is important for bringing about greater transparency and predictability to global trade rules.

6. We also note that while the average current total AMS for the EU was around $10.8 billion, the EU continues to have a disproportionately high FBT AMS entitlement of approximately 80 billion US$. With only 4.2% of the total population engaged in agriculture, the FBT AMS entitlements of the EU and the consequent domestic support in agriculture remains significant. We urge the EU to take the lead in reducing trade-distorting domestic support by considering capping, reducing and finally eliminating the most trade-distorting forms of agricultural support, the AMS.

7. We remain concerned over the EU's practice of setting maximum residue level (MRL) limits to default levels which are trade-restrictive and have created major barriers for Indian exports of rice, peanuts, chilies and spices, tea, fruits like grapes, vegetables and sea food. A number of these levels are much higher than the limits set by the standard setting agencies such as the CODEX, and are defended on grounds other than demonstrated risks to human or animal health or the environment. We urge the EU to reduce and eliminate these non-tariff barriers, including by ensuring that sanitary and phytosanitary (SPS) measures follow the objective criteria of scientific assessments of risk, as required under the WTO SPS Agreement. We also urge the EU to set reasonable, risk-based limits for regulating endocrine disruptors, which has been raised by India and several other WTO Members in the SPS Committee as well as the CTG.

8. In particular, I wish to raise the issue of tricyclazole in rice. The June 2017 notification by the EU had laid down new MRLs for basmati rice. The EU notification besides giving a limited period for transitional measures had also disregarded pertinent information about the long history of safe use of tricyclazole in several rice producing and consuming countries in the world. We urge the EU to maintain the MRL at the previous level of 1 pp million.

9. Similarly, the Anthraquinone limit for tea has been set at 0.02 mg/kg. Since the source of Anthraquinone (i.e. anthracene) is environmental, a background level of Anthraquinone higher than the Limit of Quantifiability (LOQ) of 0.02 mg/kg in tea should be allowed. I would like to emphasize that the Indian tea sector uses no anthraquinone but due to an unfounded misperception and consequent export prohibition, EU consumers are being deprived of some of the most exquisite teas in the world from Darjeeling in India.

10. Since 2004, the incidence of import duty on husked Basmati rice imported into EU from India is zero. Subsequently, several new varieties of Basmati have been notified by India and as of now, 32 varieties of rice have been notified as Basmati. However, benefit of duty-free import is available only to 08 varieties, originally agreed by EU in 2004. The new varieties occupy about 75% of the area of cultivation currently and therefore, we urge EU to extend the duty derogation to all varieties of basmati rice.

11. I would also like to express our concern over the withdrawal of equivalence for India’s National Programme for Organic Products (NPOP) since 2013 by the EU. NPOP had been recognized by the European Commission (EC) since 2006, as per the bilateral recognition agreement between India and the EU for export of organic products. The stated grounds for this withdrawal are no longer valid and this measure has subjected our exporters to go through the double certification process. Therefore, we request EU for immediate restoration of equivalence.

12. Another area of concern to India relates to the issue of transit of traditional and generic medicines for use in Africa and Latin America through EU ports. Impounding, delaying or confiscating such medicines which are not meant for use in EU, on grounds of violation of EU patents or trademarks, not only harms Indian exporters, but also deprives the poor in various countries of access to these generic medicines, which have had a major role in fighting the scourge of diseases & infections, including HIV/AIDS, in Africa.

13. Chair, before I conclude let me acknowledge the important role that EU plays in WTO negotiations and its efforts for protecting the rules-based multilateral trading system including by its leadership role in trying to preserve and reform the AB. We look forward to the active engagement of the EU in implementing the decisions of the past Ministerial Conferences and for an outcome on fisheries subsidies at the Ministerial in Nur-Sultan.

14. We wish the delegation of the European Union a successful TPR and also take this opportunity to thank Ambassador Joao Machado for his dynamic leadership and his team in Geneva for their work and cooperation.