India and UAE CEPA deliberately excluded dispute settlement from investment and digital trade chapters

India-UAE CEPA: Dispute Settlement Exclusions and Economic Impact

India has emphasized that in the context of the India-UAE free trade agreement, specific decisions were made intentionally to exclude investments and digital trade from dispute settlement mechanisms during the negotiations between the two nations. This stance was communicated by India in response to inquiries posed at the WTO regarding the details of the pact.

In terms of whether India intends to join the WTO Government Procurement Agreement (GPA), given the similarity between the government procurement chapter in the India-UAE FTA and the WTO GPA, India chose not to commit definitively. At a recent meeting of the WTO Committee on Regional Trade Agreements, several members, including Turkey, the EU, Canada, and the UK, sought clarification from India on various aspects of the India-UAE Comprehensive Economic Partnership Agreement (CEPA), focusing particularly on sensitive issues such as investments, GPA, and intellectual property rights.

The India-UAE CEPA, which came into effect in May 2022, aims to significantly enhance market access for goods and services between the two countries, with potential projections indicating a boost in bilateral trade in goods to over $100 billion and trade in services to over $15 billion within five years, according to estimates provided by the Indian government.

India’s decision to exclude dispute settlement mechanisms from the chapters on investments and digital trade under the India-UAE CEPA is particularly noteworthy in the context of ongoing negotiations on bilateral investment protection treaties with other partners, such as the EU and the UK. While India advocates for resolving investment disputes through local mechanisms, some countries, like the EU, prefer an investment court model involving members from both parties and a third country.

India clarified that the exclusion of dispute settlement mechanisms from the investments and digital trade chapters under the India-UAE CEPA was a deliberate outcome of negotiations between the two nations. Additionally, India underscored that any specific issues pertaining to these chapters could be addressed through established forums, such as the Technical Council on Investment and Trade Promotion and Facilitation as stipulated under the Agreement.

Regarding the government procurement chapter, which closely mirrors the WTO Government Procurement Agreement (GPA), India maintained a non-committal stance on joining the GPA, emphasizing its current non-signatory status.

On the topic of intellectual property rights (IPRs), India responded to queries from the EU about enforcement procedures under the India-UAE CEPA, clarifying that the domestic laws of both countries must enable effective action against IPR infringements covered by the agreement. These enforcement measures, consistent with the TRIPS agreement, are intended to be applied bilaterally or with all trading partners based on the provisions of domestic law.

In response to the UK’s query on support for small and medium-sized enterprises (SMEs) owned by women and youth, India detailed various schemes and programs aimed at benefiting MSMEs, with a specific focus on those led by youth and women. These initiatives include schemes designed to improve access to credit, upgrade technology, provide procurement and market support, as well as enhance skills development and capacity building efforts.