The newly concluded Free Trade Agreement (FTA) between India and the European Union contains a detailed annex outlining “model mediation procedures” to help resolve trade disputes through an expedited and mutually agreed upon process.
The termination of negotiations was announced on January 27, with the agreement expected to be signed after legal clearance. Officials have indicated it could be introduced next year.
“These FTA texts may undergo further modifications as a result of the legal review/shredding process. The texts will be final upon signature,” the text of the agreement states.
Mediation only by mutual agreement
According to the text, either party can request mediation if it believes that an action taken by the other party adversely affects trade.
“A Party (India or the EU) may at any time request the initiation of mediation proceedings regarding any measure of a Party that is alleged to adversely affect trade between the Parties,” the document said.
However, the procedure can only begin if both parties agree.
The request must clearly identify the measure in question and detail the alleged adverse effects on trade. If the two parties cannot agree on a mediator within the specified period, the application “shall be deemed to have been rejected”.
The mediation process would take place in the territory of the corresponding party, unless the two parties agree on another place or method.
The agreement also states that the parties “shall endeavor to reach a mutually agreed solution within 60 days of the appointment of a mediator” and may consider an interim solution during the process.
A separate chapter on dispute resolution
In addition to the annex on mediation, the free trade agreement contains a special chapter on dispute settlement.
“The purpose of this chapter is to provide an effective and efficient mechanism for the avoidance or prompt settlement of any dispute arising between the parties regarding the interpretation and application of this Agreement,” the text states.
It further notes that parties may opt for alternative dispute resolution methods such as “good offices, conciliation or mediation” to facilitate mutually agreed solutions.
“The Mother of All Trades”
The India-EU FTA has been described as the “mother of all deals”, bringing to a close negotiations that spanned nearly two decades.
Under the pact, 93% of Indian shipments will get duty-free access to the 27-member EU bloc, while tariffs on luxury cars and wines imported from the EU to India will be reduced.
Together, India and the EU account for about 25% of global GDP and roughly one-third of international trade, creating a common market of almost 2 billion people.
The agreement contains 20 chapters, including one focused on digital trade. This chapter contains provisions to promote paperless trading and cooperation on regulatory and technical issues.
The mediation chapter is considered significant
The Global Trade Research Initiative (GTRI) think tank said the inclusion of a dedicated chapter on mediation reflects the priority both sides place on dispute resolution.
“Generally, the EU has a detailed mediation chapter in its FTAs - for example with Singapore and Vietnam. Such a detailed procedure is new for India,” GTRI founder Ajay Srivastava said.
The structured mediation framework is expected to provide a faster and less adversarial route for resolving trade disagreements under the landmark agreement.
