Transcript EU-India FTA: Labour and Livelihood Impacts

EU-India FTA:
Overview and
Concerns
Shefali Sharma
22 November 2008
Timeline of the FTA
2005: EU-India Summit, decision to
form High Level Trade Group (HLTG) to
see if bilateral deal is possible
 2006: HLTG defines areas to launch an
FTA
 Oct 2006: EC’s Global Europe Strategy
 June 2007: Launch of FTA negotiations
with goal WAS to end by December
2008 (now predicting Dec ’09)

Since then….
5 Rounds of talks taken place
 Last one: Sept, in Brussels
 Next one: around November 24

What is the Content of the FTA…?
Content of the FTA

Negotiations on
Trade in Goods
– Manufacturing, NonAg: Fisheries etc
– Agriculture

Services
 Investment
 Intellectual Property





Government
Procurement
Competition
Dispute Settlement
Rules (antidumping, CVD etc.)
Trade Facilitation
Starting point on Goods….

Eliminate tariff and non-tariff barriers on
“substantially all trade” in non-ag and
agriculture over 7 years

India agreed to tariff cuts in 90% of tariff lines
already; EU wants reciprocal cuts on 95%
Sees India as Equal Partner:
India’s entire GDP amounts to 3% of the EU’s!
What this means…
India would have seven years to bring
90-95% of tariffs to zero (Ag and
Manufacturing)
 India would like to designate some of
these as “sensitive” sectors and not
reduce some to zero and not over
seven years
 List of offers in September; they were
supposed to make requests for further
cuts in October

But…
EU Industry pushing for zero tariffs in
seven years, reciprocity, and extreme
limitation of the number of “sensitive”
sectors
 EU wants market access to sectors that
India wants to exclude completely
Ex. Fisheries, Textiles, Wines and Spirits,
Automobiles

Some studies on EU-India show
Indian “sensitive sectors” as:

Processed food, fisheries, tobacco, paper,
furniture, bedding, plastics, chemicals, lowend machinery, textiles, electrical goods
 “large expected negative changes in
employment” in: paper production,
publishing, transport equipment, processed
food and beverages, tobacco
(EU commissioned “Trade Sustainability Impact
Assessment”; CARIS)
Current State of Play





Negotiations far along
Draft goods, investment and services, IPR,
competition, TBT chapters already
Discussing each others’ regulatory regimes
for services liberalisation
Ironing out conflicts on investment (India
wants to include investor protection; EU
wants capital convertibility)
Discussing areas where India has to change
legislation for intellectual property
Goods…

Round not just about tariffs (17% of Indian tax
revenue)
(75% of tariff lines of export interest to India are
in manufacturing and EU will liberalize most
of these…EU will protect around 1% of Tariff
lines of export interest to India)
 FTA about non-tariff barriers on both sides
(internal taxes on goods etc. …must be more
or equally favorable to foreign providers)
 India wants SPS and TBT requirements
removed in EU (health, env., safety
standards)
No transparency in Negotiations!!!
need to know what is being offered on
both sides and WHY?
Financial Services: David and
Goliath

European Banking Federation:
5,000 European banks, large and small, from
29 national banking associations, with assets
of more than €20,000 billion;
 India has 27 public sector banks and 29
private banks that represent 70% of market
share in the Indian economy
 Large majority of Indians already face
“financial exclusion”.
 FTA: increased exclusion; greater financial
risk, insolvency, consolidation, job losses,
lack of accountability
Services

EU interested in Energy and Water Services
(waste water treatment if not distribution)
 India complaining about NTBs in Services:
mutual recognition agreements, licensing
requirements (have to negotiate with 27 diff.
Countries anyway)
 EU using Services talks as way to pressurize
EU states in liberalising services internally
Investment
Deregulate conditions for EU firms to
establish within India
 Favorable terms of doing business as
firms within India
 Repatriation of profits and flow of
money in and out of country, residence
permits for personnel
 EU not negotiating investor to state
mechanism “investment protection”

Investment…
EU States will engage in Bilateral
Investment treaties with India
 France-India; Uk-India (already)
 EU carving out space for its own “deep
integration” treaties with EU accession
countries; but wants India to commit to
MFN (giving EU same rights as India
gives to others)

Intellectual Property





Jeopardize biodiversity; access to medicine
EU wants India to “implement” existing IPR
laws
Rights of plant breeders over farmers
Wants India to strengthen “Data exclusivity”
provisions…protection of data even before
product registered or patented…up to 10
years at least
IP protection 20 plus 5 years..they claim that
Indian processes take too many years and
cut into years of monopoly ownership
Government Procurement

Right to bid for all state projects
 Typically used to boost economic activity in
underserved areas, fulfill development
objectives; boost domestic spending (deal
with recession)
 EU GP: 99% to EU states, 1% to US, no DCs
 EU wants rights to India’s GP (11-13% of
India’s GDP) and right to prior comment and
access to information (transparency in GP)
Impact on Labour and
Livelihoods
Current Demographics…
 92% of India’s Total Workforce of 457
million people in the Informal
“unorganized” Economy (NCEUS)
 In 2005, 836 million people or 77% of
the country’s population earning less
than 20 rupees/day (~30 euro
cents/day)
Current Demographics…
42% of working age population
“usually” employed (according to last
survey 04-05)
 Around 35 million people remain under
or unemployed

Link with Liberalisation…
Jobless Growth and Joblessness...

b/w 1999-2005:
Females: 1% increase in both rural and
urban unemployment
Males: No change in rural unemployment
rate
Males: 1% decline in urban unemployment
(NSSO, GOI)
Manufacturing Growth and
Livelihoods:

Major proportion of organised labour;
diversified into several industries (which will
be targeted in the FTA)
Past Experience:
 92-96 (boom in manufacturing output and
investment)
 95-2002: 1.3 million employees lost jobs (1.1
were workers; not supervisors)
 Out of 15 major industries, 11 industries faced
(80% of workforce) fall in jobs
Manufacturing Growth and
Livelihoods: Impact on Women
1999-2000: share of women in manufacturing
24%
 Faced massive decline since 1983
 Shifted to services (domestic worker,
construction, wholesale, petty retail)
 Home-based contractual work (garments); no
protection and lower wages
 Women increasingly as “flexible” labour force
since liberalisation; informalisation…
Liberalisation and Impacts on
labour





Those who lost jobs shifted to informal sector
Real wages remained stagnant
Greater productivity per worker =
retrenchment
Growth strong in recent years, but not
resulting in jobs
Increased competition will create further
vulnerability
Impacts of FTA
FTA would eliminate close to 90% of
tariffs in manufacturing and agriculture
 More sensitive products will come from
agriculture at cost of Non-ag goods
 Small-scale Industries and both
unorganised and organised workers at
huge risk (experience of consumer
goods sector in the 90s)

Agriculture and Livelihoods:





35 million people depend on production of a
single crop for 35 crops (huge crop
constituencies)
Sharp Fall in “self employed” in agriculture
(small and marginal farmers) between 19932000
Proportion of Ag Workers increased from
42.6% in 93-94 to 48% by 2000 (lowest paid
out of any category of workers)
78% of women in rural areas working as Ag
workers as of 2004-2005; 48.9% of Men
Faster rate of mobility for men out of Ag than
women; Farmers suicides
Impacts of FTA

Increased vulnerability of farmers, agricultural
workers will create more “job seekers” in
urban areas (already see migration trends);
no viable safeguards in the FTA for this sector
 EU seeks Indian market in key industries
such as chemicals, automotives and in
sectors of major livelihood importance
(fisheries)—will lead to further displacement
 Services such as construction at risk (where
bulk of informal sector currently makes its
living)
On the Social Clause…

Lessons from WTO (Strong resistance from
Developing Countries and does not address
the core problems with free trade and loss of
employment)
 India will not sign an FTA with a social or
environment clause
 EU trade unions OK with env and social
clause; but liberalisation of 90% of Goods
sector will not prevent joblessness; Clause
would only address existing jobs; NEED for
mutual discussion with Indian trade unions
What Next?

Livelihood concerns most critical issue of FTA
 Must Monitor and address govts
 Currently, very little trade union or civil society
attention to the FTA
(GoI and EC, working under the radar screen)
 NO TRANSPARENCY OR DEMOCRATIC
PRACTICE IN NEGOTIATIONS
Build Awareness in EU and India about FTA;
examine livelihood implications in detail;
Demand answers from govts; FTA is wrong
framework for trade. ORGANIZE!!
Thank You
[email protected]