MEP: EU-India FTA should not lead to a race to the bottom

The Free Trade Agreement currently being negotiated between India and the EU must be accompanied by a clear commitment to respect international social and environmental standards, according to Graham Watson, chair of the European Parliament's delegation on EU-India relations, which has a say on trade deals.

UK Liberal MEP Graham Watson was speaking to EurActiv’s Managing Editor Daniela Vincenti-Mitchener ahead of a debate in Strasbourg on the EU-India FTA.
Mr Watson, you are the European Parliament's head of delegation for EU-India relations. You have just returned from India, as negotiators are going back and forth to iron out a free trade agreement. What stands out from those five days in Delhi and Mumbai?

I think what's interesting is that EU-India relations are on the cusp of a potentially big step forward or possibly a step sideways. By that I mean that there are a number of things happening between the EU and India which could see a very substantial step forward in our relations.

Obviously the main issue there is the Free Trade Agreement. As far as the Indians are concerned they've always looked at relations with the European Union essentially through the prism of trade. They haven't really looked at relations with the European Union in a political sense, at least not until recently.

Both on the Indian but also on the European side, the Free Trade Agreement is probably the biggest single expression of a deeper relationship. But I think it goes beyond and the reason I say that is I detected almost for the first time the beginnings of a recognition on the Indian side that Europe is a political entity.

If I were to flatter myself a bit, maybe it was the sight of a Brit going there and presenting himself as a European rather than a Brit.

But I think you will know what I mean by that. The Indians, although they've recognised the European Commission as a trade authority, they've always tended to look at relations with Europe through the prism of India and the United Kingdom, India and France, India and Germany, India and Italy, and so on.
What do you think has caused this shift? Is it the Lisbon Treaty? Do they understand what is happening in Europe at this moment? Or is it more of an Indian role on the global stage and looking at Europe as a bigger entity rather than the nation states?

I think the Indians understand things very well. They have a very highly educated and capable diplomatic class. Rather thin in the sense that their government ministries are rather thinly staffed by comparison with other countries, particularly for their size.

I think the Lisbon Treaty plays a role as they recognise that the European Union now has the legal power and indeed the duty to develop a common foreign and security policy. The visit of Baroness Ashton some months ago was helpful, but I think the growing relations between Prime Minister Manmohan Singh and President Barroso have also been very important.

To some extent they're also seeing change in different areas. One example: The European Union was very concerned about the fact that the Atalanta naval force based in Djibouti, designed to counter piracy in Somalia, was finding pirates were attacking ships farther and farther from the Somali coast - to the extent that we had some hijackings 1,300 nautical miles away from Somalia and on the other side of the Indian Ocean.

The Indian government was reluctant to get involved with Operation Atalanta. Yet as a result of discussions between EU and Indian naval commanders, the Indian Navy decided to help and the Indian government accepted the EU argument for their involvement.

So we're finding in areas of counter-terrorism or crime-fighting so as to not make quite so exaggerated… We're finding in areas of fighting crime that the Indians are very keen to work with us.

The same is true on Afghanistan. The Indians are very worried about the threat of terror on their borders. So it's almost as if in its own experience of globalisation India is recognising the European Union as a player.
India, although a nation state is very different from a conventional nation state like the U.S., for example. It has 23 languages, five religions, 27 states – so in many ways even with numbers it pairs up with the EU. In what sense do Indians see some points of commonality with the EU - things that we share? Values, soft power...

Soft power is one and it is an important one. Although I think the Indians ask themselves the question as to whether Europe is not a little too soft.

Personally, I would answer "no" to that as I think Europe speaks softly, but carries a big stick, especially if you look, for example, at the impact of European sanctions in various countries around the world, most recently on the Ivory Coast and Laurent Gbagbo.

But I think also India recognises the European Union as a major interlocutor in dealing with the other global challenges. One of the main interests we found in India, and I think one of the main interests of the members of my delegation, was talking about the efforts to combat climate change and deal with the challenge of energy security.

In my capacity of president of an interparliamentary body, the Climate Parliament, I took eleven Indian MPs, and 11 MPs from national parliaments in Europe down to the Abengoa solar-thermal power plant in southern Spain.

Partly as a result of that visit, but as a result of other initiatives as well, Indians are now expressing an interest, they are working together with us, on the development of solar power, because India has the world's greatest potential for solar-thermal power.

Indians could benefit from European technology and know-how in two areas: the first is concentrated solar-thermal for the really large-scale power generation systems. The second, and probably equally important to India, is small-scale photovoltaics, which will allow villages to keep the lights on at night and/or run fridges to keep medicines cool and so on.

More and more I see there is the recognition there of a common agenda.
Since we're getting into intellectual property and technology debate, let’s switch to the Free Trade Agreement being currently negotiated between India and the EU. We were expecting a deal by the spring. That's what we were told at the EU-India summit in December. And we haven't gotten one. What’s blocking?

There is a slight mismatch between the powers of the European Parliament, in this matter, and the powers of the Indian Parliament. When we were there we had a meeting with their Trade Committee, which is drawn from both Houses the Lok Sabha and the Rajya Sabha, and we learned that they do not have the right to say "yes" or "no" to a trade agreement. We, the European parliament, do.

As a result of that I think, we are rather better briefed by our administration than their parliamentarians are. And the Indian NGOs and the Indian trade unions, some of whom we met to discuss this, get more of their information from us than they get from the Indian government about the state of negotiations. I say that as an interesting aside.

Before we went to India, we were briefed and clearly progress is being made in some areas. For example, the Indians were very worried about generic medicines and the TRIPS agreement. The European Union negotiators have now agreed not to change India's law on access to generic medicines. They clearly need lower-cost medicines.

So I think there is a willingness on the side of the European negotiators to recognise certain Indian concerns. At the same time, quite rightly, we want the Indians to recognise some of our concerns.

And one of our concerns, and it's one that Parliament has expressed repeatedly, is that since we are effectively building a global economy, we need a global social contract.

If we are going to accompany the global economy with a global social contract, that means the Indians need to be a little more active in fighting some of the worst abuses of child labour, of environmental unsustainability, and so on.
Yes, during my recent trip to Delhi some Indians MPs said that these are problems which are not linked to lack of policies, which they exist, but to economic reasons: the great poverty to start, and the difficulty to enforce the law, especially when it comes to child labour.

It's a wonderful argument but it doesn't stack up does it? Firstly, India is not a poor country. It's a country perhaps similar to the France or the United Kingdom in the nineteenth century, where very, very considerable wealth in this country stayed alongside devastating poverty.

And that is a challenge for India to deal with. I think many Indians recognise that is a challenge.

But it is not the case that you cannot deal with it. We were very impressed when we visited the state of Bihar. Previously the poorest state, now no longer on the bottom level, because you have a chief minister who has taken serious action against corruption, who has jailed a lot of mafia bosses and so on.

Biharhas put in place a number of projects, some of which we visited, some done jointly with the European Union but some done entirely by the Indian government, to tackle poverty and school children.

For example in Bihar every girl who stays in school after ninth grade qualifies for a bicycle. This is not only giving that person something of value but it is also providing them with a means of transport to travel to school independently if they need to.

We looked at the European Union-funded scheme designed to keep girls in school rather than have them marrying at the age of 12, 13, 14. There are a number of projects going on in some of the poorest areas of India which show the way forward.
So would you say that if Indians do not come up with some kind of agreement for a global social contract, whatever form it takes, would compromise the approval of the FTA with India?

When the idea of an FTA first came up, it was actually just before the new parliament was elected. So it was 2009.

We adopted a resolution on 26 March 2009 which looked at these issues and one of the things it said was --- I quote -- "the need to ensure that investors respect core ILO standards, social and environmental governance, and international agreements so as to ensure a balance between economic growth and higher social and environmental standards."

That lays down very clearly Parliament's position and Parliament's concern that a free trade agreement should not lead to a "race to bottom". However, the Indian objection, and it's one which I understand, is that this has no place in a free trade agreement. Well, one possibility is to have a free trade agreement accompanied by a separate document which deals with these issues.
What kind of document?

It might be a statement. It might be a memorandum of understanding. It might be a commitment to work together on some of these things. But I think what the European Parliament is looking for is to strengthen the recognition that in reality we found many MPs at federal and state level who recognised that India needed to do a lot more to improve the social standards in the country.
The Parliament has opened a liaison office in Washington. Do you think that if relations with India reach a certain stage of maturity that the EP could open a parliamentary office in Delhi?

I would say, "take it one step at a time". One of the challenges we have at present is that although the European Parliament has a delegation for relations with the Indian Parliament, there is no equivalent delegation in their Parliament. They had one in their last mandate but it has not been renewed in this mandate.

While there are friendship groups with individual European states, they have no overarching delegation for relations with the European Parliament.

I was promised by the Indian parliamentary authorities that they are now acting to set up such a group and it is our hope that they might visit us even later this year, perhaps led by their speaker, Mrs Meira Kumar, who normally leads delegations abroad.

That would allow us to have a parliamentary summit with her and president Buzek. President Buzek has already extended an invitation to her on more than one occasion. And that would be a very significant step forward. We are working with Indian MPs, there is a friendship group organised by the Federation of Indian Chambers of Commerce and Industry. There is work done in India by the German political foundations.

So there are means of dialogue, structured dialogue, with their parliamentarians but there is no formal avenue for that and that is the first thing we need.

On your more general point, whether I can foresee a day when the European Parliament might have offices in Washington, Beijing, Delhi, Brasilia… Then, yes I can see a day when this might happen. Because I think one of the most interesting recent developments has been what you might call "parliamentary diplomacy". It's one of the phenomena of globalisation but parliamentary diplomacy can be very important, as we've seen with the United States.
Is there some kind of sense that the India and the EU, which both fund their political activity on soft power, could influence global governance and the final asset of the global institutional framework?

One of the things which is lacking on this I think is Europe's understanding of India.

When the European Union or its representatives look at India, too often we look at India as one country. The reality is it's not one country. Like you rightly pointed out, it is many different states with different languages, different religions, and a mixture of everything, as we have in Europe, that hang together in a federation which seems at times to be rather loose because there are relatively few people employed in the federal government.

Of course there are some things run centrally, and very effectively, the post office for example, the railways, a lot of these public services…

But I think if the European Union were to be able to envisage India more as a collection of 27 states it would be easier for us to work with the Indians and to influence the Indians in dealing with issues of global governance.

One idea for example that could be put forward is that of twinning each European country with a different state in India. This would allow us to get to know each other rather better than we have done.

It would allow us to understand how each respective political entity has developed. And it would perhaps allow us to see the world in similar terms and in terms of the needs that are there.

And certainly when you come to look at issues like climate change or energy security we have a lot in common and a lot of common work to do. I'll give you an example: we have in Europe over the centuries destroyed much of our forest cover. India still has a lot of forest cover and has a potential for more.

The Indians are experimenting with developing one of the species of Poplar tree to provide a cash crop for farmers. One of the species of Poplar not only grows very quickly and therefore provides a cash crop within seven years. But it also has greater capacity than any other tree for absorbing carbon dioxide from the atmosphere.

There is a scheme in Bihar, run by the Indian Ministry of Forests, which is planting, by giving out free seedlings, 7 million Poplar trees, sequestering millions of tonnes of CO2 from the atmosphere at the same time as they are making farmers better off.
That brings back to mind the development aid debate. Some policymakers have been quite vocal saying Europe should review its aid policy as some countries, like India have become rich. Is there an argument for giving aid for project to states and regions rather than to national governments?

I think that's true. I think the development aid question is a very relevant one. It's one that's being asked not only in Brussels but also in national capitals. And I think there is a recognition that what India needs is not money so much, as much as expertise from the European Union.

Strangely, at the same time, we need expertise from India. One of the more difficult discussions in the free trade agreement negotiations with what they call [mode 4], which is the free movement of people. It covers the extent to which Indian software engineers, for example, would have the freedom to come and travel and work in the European Union.

Maybe there is a common agenda there. We need their expertise particularly in computer science graduates. They need ours in some other areas. That becomes very quickly a commercial or at least non-aid-driven agenda.

Where we might usefully concentrate aid is in building of civil society. Indeed, I believe some of the best projects the European Union has in India at the moment are to do with strengthening civil society, improving advocacy for disadvantaged groups of people.