INTERVIEW - EU, India not ready for trade deal - Swedish PM

Trade Minister Anand Sharma speaks during a business meeting in New Delhi i...

The European Union and India need more talks to bridge differences on climate change and social issues before they sign a free trade pact, Swedish Prime Minister Fredrik Reinfeldt said on Thursday.

A Free Trade Agreement (FTA) between India and the EU, India's biggest trade partner, has been in the works since 2007. According to EU estimates, the pact could help bilateral trade cross $237 billion by 2015.

The EU has pressed India on its environmental performance, intellectual property rights and sensitive topics such as child labour before sealing a pact. India wants to keep all that off the table.

A deal will not be ready before Sweden's EU presidency ends this year, Reinfeldt said in an interview on a visit to India.

"As of now, we don't think it's possible with India," Reinfeldt said, when asked whether a deal could proceed without agreement on issues such as climate change.

"You can't take away essential parts ... to us, everything has to be in place and that's basically what we are negotiating."

In the backdrop of uncertain progress on the Doha global trade talks, India has pushed ahead with free trade agreements with countries such as South Korea and the ASEAN bloc of Southeast Asian nations.

Exports to the EU jumped 29 percent from the previous year to $34.5 billion in 2007-8, according to government data.

An EU commerce deal could improve market access for goods and services, but Trade Minister Anand Sharma this week appeared to draw a line in the sand on whether anything other than trade was open to debate.

"No extraneous issues can be factored in," Sharma told reporters on Wednesday. "We are very clear about it. There are forums to discuss such factors."

India, the world's fourth largest polluter, will not commit to legally binding emissions targets under a new U.N. climate deal, which is set for negotiations in Copenhagen in December.

Reinfeldt said he would like to see commitment on Copenhagen from heavy emitters such as the United States, but developing countries such as India, China and Brazil should also put the brakes on their rising emissions.

"...We want to see contributions with 15 to 30 percent lowering from business as usual," he said.

Swedish Trade Minister Ewa Bjorling accompanied Reinfeldt and met her Indian counterpart on Thursday. In a separate interview, she said the EU and India needed to show more flexibility to reach an FTA deal.

"Both of us are very keen to negotiate," she said. "I would like them to also, together with us, take more responsibility of how we can have lower carbon dioxide emissions."

Bjorling said it was "not impossible" to seal a global trade deal by the stated target of 2010, but again there needed to be more collective give and take to push the dialogue forward.

Sticky U.S. domestic issues such as healthcare reform were also taking the focus away from the deal, she said.

Countries such as India say the Doha pact would deliver a boost to the world economy in the wake of financial crisis and help stave off protectionism.

But a deal remains elusive after eight years of talks, and the World Trade Organisation warned countries will miss a 2010 target for a deal unless the pace of negotiations was stepped up.

"We have to wait for U.S. to formulate a clear trade policy, and we're not there yet," Bjorling said.

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