At the end of the Indo-European Union (EU) summit held in the Portuguese capital of Lisbon last week, Union commerce minister Murasoli Maran had announced that the EU had agreed to release "additional flexibilities", following top level discussions at the summit, including with his EC counterpart, trade commissioner Pascal Lamy.

The Indians tried to project the release of 3,500 tonnes of additional flexibilities as one of the major achievements of the summit and that India had finally succeeded in driving a hard bargain with the EC.

However, highly-placed European sources said there was no progress on the issue either at the summit or even in the days leading up to the summit. "These are obviously very hasty conclusions that India has drawn.

We have stated very clearly a number of times that the partial release of the exceptional flexibilities will come about only if India meets our conditions," a top European source told IANS.

Under the 1994 agreement between India and the EU, India was to notify bound import tariffs on 220 lines of textile goods by 1997. However, India failed to do so and though the EU extended partial flexibility for 1997, it refused to do the same for the following two years, despite being under tremendous pressure from India.

Finally, late last year, India notified the bound tariffs for 149 lines at the World Trade Organisation (WTO), but the matter was far from over, since the EU wanted India to amend the footnote of the notification by specifying the dates on which the bound tariffs would be kicked in each year. The EU also wanted India to notify the bound tariffs for the rest of the 71 lines. After prolonged negotiations over the issue, India finally agreed to amend the footnote a couple of months ago, paving the way for EU to agree to release the exceptional flexibilities, at least partially.

However, the EU was firm that before the actual release happened India would have to send a letter to the WTO, amending the footnote. "We are waiting for this letter to be sent. And the day it is officially registered at the WTO, we will begin our process of releasing the 3,500 tonnes," the Europeans say, adding it could take over four weeks for the EU to complete its formalities and only after that can Indian exporters derive the benefit of the release.

The Europeans believe that the Indian government has been under tremendous pressure from its textile industry on delaying the notification of the bound tariffs on the balance 71 items. "It looks like there is a very strong lobby working against this notification," remarks a source.

Some senior European sources suggest that India might be better off seeking an overall settlement of the dispute, instead of meeting it partially.

"Though we hope to meet the deadline of three months to resolve the disputes, India should look for a comprehensive solution that will allow exceptional flexibilities to be kicked in automatically each year, without having to go through the entire rigmarole over and over again.

For this India should notify the balance 71 items and make it time bound as well. That is the only way of putting this controversial matter fully and finally behind us," says a top European source.

-- IANS