"The Time has Come to Move from Words to Action" : EU Trade Commissioner

Peter Mandelson who took over as EU Trade Commissioner recently was in India to participate in the CII Patnership Summit in Kolkata. He also held discussions with Prime Minister Manmohan Singh and Commerce Minister Kamal Nath during his first visit to India. Mr. Mandelson spoke to www.icfdc.com's Dipanjan Ray Chaudhary in an exclusive interview.

Q: Mr Mandelson, you are visiting India for the first time in your capacity as Trade Commissioner of European Union. Why did you choose India as your first destination after taking over as Commissioner?
India is rapidly becoming another China in terms of the impact she will have on the world economy. And with that emerging powerhouse comes a potential for world impact and leadership to which India, a great country, has long aspired, but now has the power, at last, to realise. I believe in the potential of Europe, and now have the privilege of representing Europe, which wants to build a stronger partnership with the new emerging India, so that we can tackle together the problems of our interdependent and fragile world. India is no longer a developing country. Rather it can be best described as a rapidly developing country and today there is a mutual recognition of each other's potential.

Q: What is the current level of cooperation and between India and European Union specially after the two committed to a strategic partnership during the last summit at Hague?
Europe takes India very seriously. The time has come to move from words to action. Dramatic change is afoot. The face of international business, economic relations, and, increasingly too, global politics is changing fast. Over the years, as that old British relationship with India changed and diminished, Europe's contact with India has I feel declined. The EU is today India's largest trading partner and largest source of foreign direct investment. The EU, like India, is also about the future. I want India to take Europe seriously. I am convinced that both India and the European Union now have a shared interest in building the new strategic partnership for the 21st Century. At last November's summit, we acknowledged the political and the economic importance of India for the European Union. It reflects a recognition in Europe that India has become a major world player, with a key influence on how we work together to tackle the international issues that will affect us in the future -- poverty, climate change, terrorism, migration as well as economic growth and prosperity.
    
Q: What is the significance of the expansion of the European Union, in the context of its relations with India?  
It was the fall of the Soviet Union that led to last year's dramatic enlargement to 25 Member States. It has brought together competing, and all too often once warring, nation states, through integration and cooperation, to form the world's largest economic space, and a political union. The dramatic enlargement of the European Union is an historic triumph of peaceful democratic transformation in our continent. The recent decision to set a date for accession negotiations with Turkey, which I support, is a token of this confident outgoing approach. Our readiness to pursue the accession of a country with a large Muslim population shows that the European Union is open to the world. New nations are joining Europe, not to surrender their sovereignty to a new Brussels super state, but to safeguard their freedom by joining a community of values that they share and multiply their strength and influence. India, like Europe, is made up of many languages, races and religions. Diversity is your strength as much it is ours. And as your last elections here showed, a country rooted in democracy and pluralism has proven its stability. India and Europe are natural partners, and we should realise the fact. One of my fundamental objectives as a new Commissioner is to make Europe more effective in the world.

Q: EU is today India's single biggest trading partner as a bloc and largest source of foreign direct investment. How do you foresee India's economic growth? 
Trend growth in India's economy has risen about one percentage point every decade for the last three decades. There is a wide consensus that it will continue at a minimum of six per cent - possibly more. By 2030 India should have overtaken China in terms of population, and have become the world's third or fourth largest economy. However, it is an economy full of paradox, and of potential yet to be fulfilled. Mobile telephones are selling at two million a month in India and there is a high appetite and aptitude for education. There are strong entrepreneurial and technological abilities. But also strengths in more traditional sectors, including agriculture in your country. India still faces a daunting challenge of poverty, with three hundred million people living on less than a dollar a day. India needs to improve its infrastructure for transport, power and telecommunications to emerge as a strong economic power. India's economy has forged ahead since economic reform began. The present Indian Government has recognised this. Its Common Minimum Programme, sets the ambitious goal of 7 to 8 percent sustained growth every year and a doubling of per capita income in the next 10 years.

Q: What are the challenges before India in enhancing and deepening bilateral trade?
India's backtracking on assigning a higher frequency spectrum for GSM-based mobile operators has severely jeopardised the European Union's GSM investment in India. More than the low FDI limit, regulatory policies hamper foreign investment in telecom . We are of the firm opinion that India should stick to its original commitment and free up frequency spectrum allocation to GSM-based mobile operators. This is crucial for upgrading the proposed Indo-EU investment and trade agreement.  The telecom industry in India is poised to touch revenues of $25 billion by 2007, compared with the current $9 billion, with a subscriber base of 200 million.  We are not isolating India. There is an international consensus on the spectrum distribution among various mobile telephone operators. A hike in FDI from 49% to 74% would not do wonders unless regulatory environment is changed. With India becoming a 'dominant' economy of the world, it would need to harmonise its regulatory policies with the best global practices.  India can only capitalise on its strengths and become a major economic power through open trade and investment. This does not mean that I have come to preach the case for an overnight revolution.

Q: How do you perceive India's role in the current Doha Development Agenda in the WTO negotiations?
India's approach to the Doha Round will be a litmus test of India's commitment to progressive domestic economic opening. My highest priority is to help bring to a successful conclusion the Doha Development Agenda. I believe that India and Europe have a shared interest in its success. I look to India, and to other advanced developing countries and regional leaders, to take up the challenge of making the Doha Round a success, not least through injecting momentum at the G-20 event which India will host next month. India has much to gain from liberalising trade in services, and should not feel defensive. But, frankly, India's offer so far has been disappointing. In a sector such as information technology, where India is now a world leader, no commitment has yet been made. An ambitious new offer from India would send a very positive signal, both to other WTO members and international investors. The debate on outsourcing, which has been so sensitive in Europe, should encourage India to be confident of its ability to compete in this sector. On non-agricultural market access, India still has a rather restrictive trade regime overall, including the highest average tariffs in the world and a range of non-tariff barriers such as import bans and mandatory certification requirements. In the long run, market opening will have a positive impact on growth and competitiveness in India.

India was a beneficiary of the Uruguay Round. The Doha Development Agenda has to yield results from which all participants can claim to be winners. After the Uruguay Round India's exports more than doubled and India's share of world trade grew by 40 per cent. I realise India demands fair treatment from Europe, and the rest of the world. Take textiles, on which 80 million Indian jobs depend. The European Commission is working to preserve the benefit for Indian textiles in our future General System of Preferences.

For my part as EU Trade Commissioner, I can give you this pledge. I intend to adopt a rigorous, disciplined and sparing approach to the use of anti-dumping and other Trade Defence Instruments. But I want India to act in the same spirit. India shares the interest of Europe and other WTO members in further strengthening of the multilateral rules based system so that trade can be conducted fairly and transparently. So the rules must be used properly.

Q:  Kindly elucidate the areas of cooperation between India and European Union towards building a strategic partnership in trade.  
The new Indo-EU Joint Action Plan marks a new beginning in building trade and investment links. We have already concluded agreements on scientific and technological cooperation, and on customs cooperation. We are about to reach agreement on the Galileo satellite navigation system. And we are about to start negotiations on an EU/India maritime agreement. A new and ambitious bilateral agreement would, in my view, be an excellent idea. Intellectual property protection provides confidence to European investors. Here again, I would like to work with India, in particular on the idea of a bilateral agreement on the protection of geographical indications. Regulatory cooperation and convergence is another important area.  

EU and Indian industries have done an excellent job in identifying obstacles to trade in various sectors through the Joint Initiative for Enhancing Trade and Investment. I want to work more with Kamal Nath and other Indian colleagues to build on this government-to-business dialogue.

Europe and India must develop a strong partnership on key areas of international policy. We will work to make it a success because we have a strong economic and political interest in doing so. On the second, I believe that Europeans are increasingly ready to see India and the other developing countries of the G-20 assume a greater role in international institutions and organisations. We certainly need you to take a greater role in resolving the complex problems of multilateral negotiations, above all in trade. For me the test of success will be whether we can now work together as political partners in settling Doha. I look to India to assume the risks and responsibilities of leadership, and I offer you Europe's partnership in doing so.

[www.icfdc.com, 17 January 2005]