Parliamentary panel questions Diwali deadline for India free trade deal
A PARLIAMENTARY panel last Friday (22) warned the UK government against accepting “a poor deal to rush things through” only to meet a deadline set for the completion of a free trade agreement (FTA) with India.
The House of Commons International Agreements Committee questioned the Diwali (October) deadline set for the conclusion of the negotiations by outgoing prime minister Boris Johnson during his visit to India in April.
In a report titled ‘UK-India free trade agreement: Scrutiny of the Government’s Negotiating Objectives,’ the committee also cautioned that the UK could risk giving up a good deal for a fast one, by setting a “time ambition over and above content”. “A growing economy, as well as a growing middle class and consumer market, make India an attractive trading partner for the UK,” said Baroness Dianne Hayter, chair of the committee.
She said, “The UK government, however, must not accept a poor agreement simply to meet a deadline.
“We have noted the aspirations in the negotiating objectives are particularly
challenging because some would require changes to India’s own cultural and legal approach, which are unlikely to be achieved, or would take a long time.
“We reiterate our recommendation that the government should publish a trade policy, showing how trade links into broader foreign policy, security, defence and other domestic objectives, as well as labour, women’s and human rights, and the environment. “This will enable trade policy to be understood in relation to other priorities and enable us to assess the impacts and trade-offs.”
The cross-party committee said India’s “historically protectionist policies”, different regulatory approaches and business practices would mean changes in domestic legislation, which it said could be a lengthy process to implement.
UK MPs also noted the practice in India of requiring businesses to make socalled “facilitation payments”, different administrative requirements at national and state level, a lengthy application process for business permits, a complex tax regime, low levels of contract enforcement and limited IP protections.
“The committee therefore questions the arbitrary Diwali deadline set for the conclusion of the negotiations, cautioning the government could risk giving up a good deal for a fast one by setting a time ambition over and above content,” it said.
The panel noted that although the Boris Johnson-led government emphasised it intends to conclude an agreement that is comprehensive, it is unclear how comprehensive that agreement can be “given India’s challenging regulatory and business environment”.
“Because the government’s objectives do not take sufficient account of the Indian context, they can come across as overly ambitious or unrealistic, with some (for example on procurement) seeming particularly unattainable,” the report said.
The committee called on the British government to publish a comprehensive trade policy that provides a framework within which all negotiations can be conducted. This is now expected to be taken up after parliament is back from its summer recess in September, by which time the UK is expected to have a new prime minister – either former chancellor Rishi Sunak or foreign secretary Liz Truss.
While trade experts indicated the ambition for a UK-India FTA is unlikely to be affected by the leadership change at Downing Street, the Diwali deadline for its completion has had a question mark.
“I would much rather have a more comprehensive deal that takes slightly longer to complete. It’s good to have a deadline, good to have that target to try and finish by Diwali. But it may not be the end of October but the end of December; my target is the end of this year,” said Lord Karan Bilimoria, who heads the UK-India Industry Taskforce as a joint commission to enhance cross-industry collaboration on the ongoing trade negotiations.