EU leaders seek trade deal with India
NEW DELHI, Nov 30 (Reuters) - India and the EU will use a summit on Friday to push a trade deal which Europe sees cementing its presence in fast-growing Asia and spurring growth, and discuss climate change, where differences run deep.
After a bruising few days in Beijing, where they clashed with Chinese officials over Europe's ballooning deficit with the Asian giant and product safety, EU leaders have been saluting India's growing economic clout.
Trade chief Peter Mandelson told a business summit on Thursday a free trade pact with India would boost both economies and help shore up global demand if the world economy cools.
But analysts say a deal could take years and India should beware of signing up quickly to a comprehensive agreement.
"An India-EU free trade agreement is a very strategic idea," said T.K. Bhaumik, chief economist at Reliance Industries Ltd (RELI.BO), India's top listed firm.
"Negotiations will be most difficult because EU interests extend much beyond normal trading and investment.
"Tariffs are not the real issue. The real issues will be non-tariff barriers such as labour, environment, technical standards and climate change."
India has refused to commit to emissions targets, saying it must use more energy to lift its millions out of poverty. The government says this is something rich nations, which have burnt fossil fuels unhindered for over a century, should understand.
A top official this week slammed a U.N. report for recommending that developing countries cut greenhouse gas emissions to 20 percent below 1990 levels by 2050.
On Thursday, India's trade minister joined in just days before a U.N. conference opens its doors on the Indonesian island of Bali to devise a replacement for the Kyoto protocol.
"On a per capita basis our emissions are among one of the lowest in the world," Kamal Nath told businessmen.
"India shares global concerns and is integrating global environmental concerns with its developmental process."
New Delhi has said it wants to clinch a trade deal by the end of 2008, but Mandelson insisted the pact's substance was of more value than its timing.
European trade officials want to deepen discussions on sensitive areas with India such as removing barriers to trade in services, intellectual property protection and public procurement, which they say is not transparent.
The EU is India's largest trading partner, accounting for a fifth of India's total trade, and is also one of its most important sources of foreign investment.
But Reliance's Bhaumik adds a word of caution.
"Let us not be under the illusion that they are talking of an alignment with India because they are unhappy with China," he said. "China is a much bigger economy. Obviously, their interest in China remains intact." (Editing by Mark Williams)
