Running a few years behind the initial 2022 Diwali deadline, India and the UK have finally concluded their talks on the Free Trade Agreement (FTA). Projected as an “ambitious and mutually beneficial” FTA, the agreement marks a significant step for both economies. Reportedly, this is the UK’s biggest trade deal since Brexit and on the Indian side, it shifts thefocus from east to west, in terms of bilateral trade partnerships, and saw India negotiating on many non-trade issues like environment, labor, gender etc. Although the agreement is not available on the relevant websites of either of the countries (presumably because of legal scrubbing and fine-tuning of language), the press releases and short summary documents give a sneak peek of its contents.
Surprisingly, the press release by PIB has not mentioned IP as a subject despite it being a chapter, and the only official document that touches upon the IP chapter is the UK summary. As per the UK’s summary, the IP chapter of the Agreement “will go far beyond India’s precedent in FTAs, building on our shared commitments in numerous international IP treaties and the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.” While the summary does not expressly state what these TRIPS and other FTA plus commitments for India are going to be, we have previously seen some concerning provisions around data exclusivity, removal of patent working disclosure requirement, and dilution of pre- grant oppositions were proposed to be made a part of the agreement.
What’s there in the IP and Innovation Chapters?
On patents, the summary states that the Agreement seeks “improvements to patent procedures in India to reduce the administrative burden, speed up processes, and lock in commitments that provide for transparency and legal certainty in the patent system.” The aspiration to reduce the administrative burden and speedy resolution will certainly be beneficial for the Indian patent regime, given the concerns vis a vis quality of the orders by the Patent Office and time taken to examine an application (see here, here, and here). However, I am not entirely sure what the summary of the agreement means by “lock in commitments … providing for certainty”. Does it mean that there shall be a presumption for the validity of a patent? Or something else?
Another area which the Agreement aims to revise is copyright. As explained in the UK summary, the Agreement aims to address the interests of UK creators, rights holders, and consumers, without specifying what these interests are. It specifically states that the revamp will inter alia concern public performance rights, and artists’ resale rights. It also states that India will conduct an internal review of their copyright terms of protection. These provisions seem similar to part of the 2022 leaked IP chapter, whereby it was proposed to curb the application of the doctrine of exhaustion and extend the term of copyright to 70 years.
The UK also seeks to benefit from the provisions concerning GI, wherein the higher level of protection previously accorded to wines and spirits will also apply to other goods from the UK. One of these provisions could be a prohibition over qualifiers like “kind” “style” and “type” of products, which is presently prohibited only for spirits and wine under TRIPS. Perhaps owing to these obligations, India has proposed to change its GI Act.
Notably – the chapter does not seem to require the UK to undertake a legislative change, nor would it undermine the UK’s IP system or its international position in IP. On the flipside, these obligations could require India to amend its IP provisions substantially. This takes us back to the criticisms against India entering into agreements with a contrasting IP regime since entering into such agreements may lead to a stark change in the Indian IP regulation, which has been painstakingly put in place after years of work balancing the national demands on one hand and international obligations on the other. In my previous post on the leaked IP Chapter, I explained how the countries from the Global South are often expected to move away from the IP regime that could benefit their industries and innovation ecosystem, all in the name of bilateral trade relations with a developed nation. Unfortunately, the cost of building these relations are often in terms of distorting economic decision- making, as explained by Prof. Jagdish Bhagwati in his book “Termites in the Trading System” (see here for a book review explaining this point among other arguments by Prof. Bhagwati).
The question then arises-
What is India Supposed to Gain from this Agreement?
India is set to benefit from the terms concerning employment visas and the exemption for its citizens working in the UK from paying double social security contributions. As per the summary published by PIB, the FTA eases mobility for Contractual Service Suppliers and Intra-Corporate Transferees, among others. It has also been reported in the summaries that certain visa routes not available for temporary workers from India, like musicians, yoga teachers, and chefs, will now be open. Additionally, the agreement comes with a Double Contribution Convention wherein the employees moving between the countries and their employers are supposed to pay social security contributions in one country at a time. The convention also states that the temporary employees would pay social security contributions only in their home country for up to 3 years (a move extensively criticized by the Conservative Party of the UK (see here and here)). However, (in an unpopular opinion), the question that we should be asking is whether it is a benefit after all? Wouldn’t such provisions reduce the workforce of India merely as a resource and further the problem of brain drain from India? Although one can understand that skilled employees from India would seek greener pastures and better employment opportunities, merely facilitating easement for migrating should not be the goal of a trade agreement that is propagated as mutually beneficial for both nations. Now, some may say that improvement in infrastructure and opening up better opportunities within India for skilled employees is under the purview of the Bilateral Investment Treaty (BIT) since that’s the relevant agreement/ treaty that concerns foreign investments. However, it is important to note that progress on the BIT between the UK and India has been halted owing to differences between the parties on issues of taxation and dispute resolution.
Non-IP Highlights From the Agreement
Let’s take a look at non-IP highlights from the Agreement for the trade enthusiasts. The agreement is remarkable for the tariff cuts offered by India (of over 400 million pounds!). As stated in the UK’s summary of the agreement- India is set to “remove or reduce tariffs, or pre-existing zero tariffs, on 90% tariff lines, which will cover 92% of existing goods imports from the UK” (based on 2022 figures of Trade). Some of the notable tariff concessions are for whiskey/ whisky and gin from 150% to 75%, and staged to 40% from the 10th year onwards; cars and car parts within a quota, reducing tariff from over 100% to 10%, depending on the volume of import; medical technology devices, including surgical, dental and veterinary instruments which will be eligible for tariff-free entry after 10 years from the agreement. On the other hand, the agreement will eliminate tariffs for 99% of Indian goods exports and would give access to products like frozen shrimp, apparel, and textiles.
As noted in this report, the deal in this regard is beneficial mostly for the UK, as India had been enjoying a tariff-free or low-tariff access to the UK market. With these terms, the Indian market will substantially be opened up for the UK industries, which would mean more choices for the Indian consumers but more competition for Indian domestic industries from the UK. However, to address the latter concern, the agreement has a kill switch mechanism of a ‘bilateral safeguard’ if the surge in imports due to tariff concessions causes or threatens to cause serious injury to the domestic industry of either country. The agreement also opens up the government procurement market for the UK, wherein entities from the UK will be eligible to bid for government contracts. This would make the UK companies (producing at least 20% of their product or service from the UK) an exception to the existing conditions under “Make in India”, which gives preferential treatment to goods produced within the territory of India for government procurement. It is noteworthy that while India has opened its doors for UK goods for government procurement, the deal is not reciprocal, and the UK has kept India out of its competitive government procurement market. (For more on this see here). On one of the most contentious issues- the Carbon Border Adjustment Mechanism, the summaries released by the parties are silent. However, reportedly, there has been an understanding that India can retaliate or rebalance its concessions if the UK decides to impose a carbon price on goods imported from India.
Overall, where the agreement has been hailed as landmark by some, with regard to IP it can kick start a domino effect with other developed economies with whom India is set of have bilateral trade agreements- like the EU (coincidentally, the negotiations of the latest rounds of this FTA starts today!), US, and New Zealand, demanding it to change its IP laws further and incorporate additional TRIPS plus provisions like increasing the term of protection for Copyright, further diluting the patent levers like pre grant opposition, disclosure of working requirement, and the provision to issue compulsory licenses, and introduce a data exclusivity regime.
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