India prepared to take EU to WTO over drugs

NEW DELHI Wed Mar 31, 2010 12:05pm EDT

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NEW DELHI (Reuters) - India is ready to launch a formal dispute against the European Union at the World Trade Organization over EU seizures of Indian generic drugs, the Indian Trade Secretary said on Wednesday.

"I am ready. I have my legal briefs ready," Rahul Khullar told Reuters, without saying when India could present a case.

New Delhi says it wants to solve the dispute "amicably" but there has been no breakthrough so far between India and its largest trading partner. Khullar said India was still holding out for a solution.

Khullar, a top civil servant key to Indian negotiations, also said the Doha world trade talks were "standing still" and India was waiting for the United States to move the talks forward.

A formal trade dispute has loomed for a long time between India and Brazil on one side and the EU on the other.

Developing countries believe the case, originally involving the seizure by Dutch customs of a blood pressure drug en route from India to Brazil, is a symbol of their mistreatment by rich nations and corporations.

India has said the drug shipments were consistent with WTO regulations. The issue is sensitive in a country with a thriving generic drugs industry and hundreds of millions of poor needing access to cheap medicine.

A spokesman for the EU said in response that the EU was taking the drugs seizures "very seriously" and had implemented measures that prevented further incidents.

"We are now revising the relevant EU legislation to ensure that trade in generics is not hindered when transiting through EU territory," European Commission trade spokesman John Clancy said.

"However, we also need to acknowledge that there are serious problems of counterfeit medicines which are arriving and transiting in Europe," he added.

STANDING STILL

Global demand for generic drugs from Indian drugmakers such as Dr Reddy's Laboratories and Ranbaxy Laboratories and Cipla Ltd is booming as nations battle rising healthcare costs.

The Indian generics business boom has lured Western drug makers that want to raise exposure in fast-growing emerging markets.

The dispute over seizures has rumbled in the backdrop of negotiations between India and the 27-nation EU bloc for a free trade deal which both sides aim to seal by October.

Trade between India and the EU currently stands at 78 billion euros ($105 billion). Brussels says the pact could open up export opportunities worth $9 billion for India.

Negotiations began in 2007 but need to close differences on issues such as market access and the EU's moves to link commerce to India's performance on child labor and the environment.

Khullar reiterated New Delhi's position to keep "extraneous" issues off the table, but did not elaborate.

Medical advocacy group Medecins Sans Frontieres has called India "the pharmacy of the developing world" and flagged concerns that the trade deal could tighten intellectual property rights on generic drugs and limit the poor's access to cheap drugs.

New Delhi has said such concerns are unfounded.

Nations took stock of the Doha world trade talks in March, which look almost certain to miss their stated target of concluding by 2010.

One sticking point is that the United States, crucial to any deal, wants to see big emerging countries such as India and China open their markets more to foreign businesses.

But Washington has also drawn criticism for its perceived foot-dragging on the talks, which were launched late in 2001 to free up global trade flows and help poor countries develop.

It took six months for the U.S. to appoint two top trade negotiators, including its WTO ambassador.

"A stocktaking has told you exactly where we are, which is, we are exactly standing still. We haven't moved," Khullar said.

He went on to echo recent comments made by the European Union's trade chief that it was up to the U.S. to push the talks forward.

"Now in the next stage, the Americans have been told, come to the table. What is it you (Washington) want? If you don't come to the table with something that you want, then it's your fault."

(Additional reporting by Bate Felix in BRUSSELS; Editing by Nick Macfie)

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