EU moves to calm South Asian anger

Date: 29/02/1996

By Shada Islam

SOUTH Asian nations, sidelined in the run-up to next week's landmark summit between EU and East Asian leaders in Bangkok, have been promised increased attention from the Union in the coming months.

Foreign Affairs Commissioner Manuel Marín is drawing up a new strategy paper aimed at revitalising EU ties with India, and hopes to start negotiations shortly on new trade and cooperation agreements with both Pakistan and Bangladesh.

The courtship of South Asia is set to start immediately, with Italian Foreign Minister Susanna Agnelli leading an EU ministerial troika to Delhi on 3 March, just hours after the Bangkok summit comes to a close.

Agnelli's message will be clear: the promises of 'global partnership' made in Bangkok will apply to all of Asia, not just to those present at the summit.

Although attention has focused on East Asia in recent months, EU officials insist they remain equally committed to deepening ties with South Asia.

But India and other South Asian countries have made no secret of their anger at being excluded from the Bangkok meeting. As Indian Foreign Minister Pranab Mukherjee complained recently: “Asia without India is like Hamlet without the prince.”

The European Commission says it is not to blame, pointing out that the idea for the meeting came from Singapore's Prime Minister Goh Chok Tong and that invitations were sent out by the summit's Asian hosts - who, this time around, chose not to include the South Asians.

“India and Pakistan are not being isolated,” insisted one EU official. “The troika's visit to Delhi is proof that South Asia is not being forgotten.”

South Asian diplomats are, however, only partially reassured. While Agnelli's visit is important, South Asians point out that they will not be participating in the follow-up meetings on trade and investments that will be decided in Bangkok.

Since these discussions will focus on issues related to the World Trade Organisation and the agenda for its ministerial meeting in Singapore in December, participation by India and Pakistan would have been quite valuable, they say.

But Commission officials insist that Marín's initiatives will give a boost to the Euro-South Asian dialogue in the coming months.

“We want a new partnership with India,” stresses Juan Prats, external affairs director-general at the Commission. Details of the new strategy are still being thrashed out by the Commission's services, but officials say the idea is to update the EU's view of India in the light of recent economic developments in the country.

Some of these areas were covered by the partnership and cooperation agreements signed by the EU and India in 1994. “The earlier EU agreements with India emphasised our role in assisting India's development,” says an EU official. “This latest agreement puts the focus on partnership between equals.”

In it, both sides stress the importance of the private sector in promoting Indian development, with the EU promising to help Delhi with its economic liberalisation efforts. Union officials say that deregulation of the Indian economy has increased the country's competitiveness in the European market. In 1994, both EU imports from India and exports to the country grew by a healthy 20&percent;.

While the EU is the largest outlet for Indian exports, India is seeking to enlarge its share of the European market.

In 1994, despite the size and growing dynamism of the Indian economy, its exporters only managed to capture 0.8&percent; of the European market. Delhi is seeking to expand exports of textile, leather and engineering goods, but believes that at least some EU trade policies do not work in its favour.

As of next year, for instance, India will lose half of the trade concessions for its textile and clothing exports which it currently enjoys under the EU's Generalised System of Preferences (GSP), as developing countries which have proved to be 'highly competitive' in specific sectors are progressively 'graduated' out of the scheme. From 1998, these concessions will be withdrawn permanently.

At the same time, competition in the European market is getting fiercer. Since 1 January 1996 and the entry into force of the EU-Turkey customs union, Ankara, whose cotton and other textile exports are in direct competition with South Asian goods, has had free access to the EU. Restrictions in the textile trade with Russia and Eastern Europe are also coming down.

For its part, the EU is seeking improved access to the Indian textile market, arguing that the country's increasingly prosperous middle class can afford to spend money on up-market European fashion textiles and claiming Indian textile tariffs and other non-tariff barriers are still high.

Trade Commissioner Sir Leon Brittan, who visited India earlier this year, is also seeking an Indian commitment on liberalising the telecoms sector and would like India, Pakistan and other South Asian states to agree to a WTO study on the controversial question of linking trade and labour standards.

The Commission's planned paper on relations with India is expected to look beyond these specific problems. “We will still be looking at the future, the challenges and opportunities facing India and where our relationship should be going,” says an EU official.

There is some talk of offering India the prospect of a free trade pact with the EU. But given recent criticism by France and others of the proliferation of free trade area proposals made by the Commission, it is not clear if the idea will come to fruition.

The mandates being drawn up by the Commission for opening negotiations on new cooperation agreements with Pakistan and Bangladesh are more modest. “The plan is to update the agreements signed with these countries in the 1970s,” an EU official says.

The focus will be on boosting the role of the private sector, encouraging more joint ventures, helping both countries to fight environmental degradation and promoting coordination in science and technology.