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UPDATE 2-India, EU to resolve generic drug dispute-minister

* India, EU officials to meet later in November

* India says drug shipment consistent with WTO regulations

* Both sides aim for free trade pact in 2010

NEW DELHI, Nov 6 (Reuters) - India will resolve a dispute with the European Union over generic drugs in an amicable way, Trade Minister Anand Sharma said on Friday.

A formal trade dispute has loomed between India and Brazil on one side, and the EU on the other. The case threatened to escalate to India and Brazil taking the EU to court at the World Trade Organisation.

The row erupted against the backdrop of flourishing trade ties between India and the EU, which both sides aim to boost with a free trade pact by 2010.

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

“They have taken tangible steps,” Sharma told reporters after talks with EU officials in the Indian capital. “We both are committed to resolve the outstanding matter amicably.”

Sharma said the shipment of drugs was consistent with WTO regulations. “These shipments were for third countries, and therefore there was no violation,” he said.

The row sums up a major dilemma in trade and intellectual property policy -- how to reconcile the provision of affordable medicine to people in poor countries with the need to encourage medical research through patent protection.

Sharma was joined at a press conference by the Swedish Trade Minister Ewa Bjorling and EU Trade Commissioner Catherine Ashton, who said officials on both sides were meeting later in November to resolve the dispute.

“We have no intention to stop the legitimate export or transit of generic medicine,” Ashton said. “We want to work together to resolve the issue.”

FREE TRADE DEAL

India and the EU, India’s biggest trade partner, met in New Delhi this week with a potentially lucrative free trade deal and the slow-moving Doha trade talks also high on the agenda.

A Free Trade Agreement (FTA) has been under negotiation since 2007, and the EU estimates such a deal could help bilateral trade cross $237 billion by 2015.

The EU has linked the talks to India’s environmental performance, intellectual property rights and sensitive issues such as child labour. India has said it wants to keep the focus of the talks on trade. [ID:nDEL315020]

Ashton played down such differences but said a trade pact should tie in with efforts on climate change as well as spur growth in jobs and businesses.

“We are collaborating to make sure that everything we are doing on trade is also for supporting our economies ... to make sure everything we do supports our ambition on the environment,” Ashton said.

“It’s not really about one side, in a sense, making another side do anything,” she added.

Earlier, Indian Prime Minister Manmohan Singh said New Delhi hoped to conclude the pact by 2010. [ID:nDEL538712]

“These issues may have been referred to,” Sharma said. “Negotiators meet, discuss all aspects but be very clear ... there are forums which deal with climate change.”

“Here we are talking of trade, investment and services. No other extraneous issues are part of the negotiation,” he added.

Exports to the EU jumped 29 percent from the previous year to $34.5 billion in 2007-8, according to Indian government data. (Editing by Alex Richardson)

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