Caught in the act of reverse lobbying

Caught in the act of reverse lobbying EU Commission uses EU-India business summit and development funds to back its own big business agenda December 2010 The Business Summit will not only be an excellent opportunity for European and Indian companies to communicate their ideas to the political leaders present, but also constitute a highlevel networking opportunity, bringing together European and Indian businesspeople and officials. EU-India business summit website 1 On 10 December, the annual EU-India summit is held in Brussels where political leaders hope to agree on the broad shape of an EU-India free trade agreement and give the negotiations a final push towards conclusion. A parallel big business summit has been organised alongside, and will provide crucial support while more and more small businesses and MEPs oppose the deal. At first glance, the business summit looks like it has been organised by industry lobby groups from the EU and India. But internal EU Commission reports obtained through access to information requests show that the EU administration is actively involved in preparations for the event, including the messaging and follow-up. It is lobbying hard to make the forum a key strategic meeting for consensus building and co-operation between Europe and India's corporate elites. And the Commission has provided millions of Euros from its development fund to facilitate this process. In EU trade policy, the Commission has a clear track record in what an academic has called reverse lobbying 2. It regularly encourages the creation of business structures and positions which support its own big business agenda 3. In the case of trade relations with India, this agenda has met with fierce resistance from farmers, fisherfolk, small businesses and traders who see the planned EU-India free trade agreement as a severe threat to their livelihoods. A number of Indian state chambers of commerce are supporting a civil society call for an immediate halt to the negotiations 4. Just recently, 25 MEPs echoed their concerns in a letter to EU Trade Commissioner Karel de Gucht 5. The Commission is trying to counter this resistance by orchestrating consensus among big businesses on both sides of the talks to radically open up markets. And the EU-India business summit seems to be the perfect place to do that. Granting privileged access to political leaders In the run-up to the last business summit in 2009, officials from the EU delegation in Delhi and from the Commission's Brussels-based trade, enterprise and external relations departments put forward their own ideas for key themes for the summit ( to have something concrete to present to CEOs to lure their interest ) and for its programme ( fewer subjects... including the EU priorities ) 6. The Commission's external relations department (DG Relex) suggested changes to the draft summit statement prepared by the European employers' federation BusinessEurope and the Confederation of Swedish Enterprises, the business organisation from the country then holding the EU Presidency. It was BusinessEurope which had to remind DG Relex that the joint statement will be agreed between the business organisations 7. 1

Commission officials also urged European industry to include a roundtable for chief executives in the event to enable intimate discussions between 8-10 top CEOs from both sides, including a high level interaction with Ministers/Commissioners 8. Similar roundtables had taken place in 2006 and 2007 and were praised by the Commission as a space for big business to provide direct inputs to the trade negotiations through the privileged access that CEOs may gain to leaders 9. It was agreed that the EU delegation in Delhi would liaise closely with the Swedish embassy and the Indian contingent to take the chief executive roundtable forward and attract high profile CEOs 10. During the summit, a roundtable indeed allowed chief executives from corporate giants like ArcelorMittal (steel) and Bharti (telecom, financial services, retail, processed food) to meet the Indian and Swedish trade ministers and the then EU Trade Commissioner Catherine Ashton. The Commission was particularly pleased about the strong and general support for concluding the EU-India free trade negotiations as soon as possible and about the support for skilled labour mobility from both sides. It was also happy to hear the Indian telecom mogul Bharti Mittal speak of the need for India to open progressively its services sector (insurance, banking, retail) even though he added that one had to be careful in doing this in order to avoid unrest 11. These are key items on the Commission's own agenda that have raised concerns among trade unions and public interest groups in Europe. They have moreover triggered massive resistance in India, for example, from thousands of street vendors and small shop owners who oppose the opening of the Indian market to European supermarket giants. But support from business seems to have outweighed these concerns. A businessman who participated in the event described it as a turning point in the EU-India trade talks, which he said had been losing steam. After the summit, leaders on both sides seemed to rediscover their enthusiasm 12. Streamlining the business summit with development money Nonetheless, the Commission appears to be unsatisfied with the general progress of the summits and determined to tighten its grip on future events. Even before the 2009 summit took place, it had complained about the too weak and slow preparation and the lack of a joint statement from both business communities. It warned industry that we cannot go on with Business Summits as usual and that there is little value in having a one-off high profile event unless there is appropriate follow up to discussions or key recommendations. A talk-shop had to be avoided. What was needed was a meaningful process with appropriate follow up discussions and key recommendations 13. DG Relex suggested that the Delhi-based European Business and Technology Centre (EBTC) should be involved in the preparation and follow up 14. The EBTC is run by the Association of European Chambers of Commerce and Industry, Eurochambres. But it was initiated by the Commission in 2008 to essentially promote the EU interests in India and tap the fast-growing Indian economy 15. For Eurochambres, the centre is part of a wider vision to promote our common interests, to put the European flag in emerging markets 16. The EU finances 80% of the costs of setting up the EBTC and regional offices all over India with more than 16.5 million from its external aid fund 17! It also keeps a close eye on its activities to make sure that they are implemented according to plan. The ostensible aim of the EBTC is the promotion of clean technologies made in Europe (including controversial ones for agrofuels and 'clean' coal). But the EU tender made it clear that the centre should also detect and challenge market access barriers in India. According to its director, it also aims to feed the political dialogue, say the Free Trade Agreement with a consolidated voice of European businesses 18. The EU's ambassador, too, recently encouraged the EBTC to enrich the bilateral policy dialogues by involving, in particular, the respective private sectors 19. 2

The detrimental consequences of the planned EU-India free trade deal In October, more than 100 civil society organisations from Europe and India raised the following concerns about the planned free trade deal, calling for an immediate halt to the negotiations: Increased market access for European businesses would expose Indian farmers, fisherfolk, street vendors and small businesses to crushing competition and lead to massive job and livelihood losses. The deal's intellectual property rights provisions would severely affect India s ability to provide affordable medicines for the treatment of AIDS, malaria and cancer across the world. Further liberalisation of investment would remove policy tools to protect and build domestic industries. Liberalising foreign direct investment in land, fisheries and other natural resources would deprive millions of access to the resources they depend on for their livelihoods. Further liberalisation of financial services would cushion lending to disadvantaged sectors like small farmers and enterprises, and would lead to a dramatic decline in rural credit. Financial sector liberalisation would also further destabilise the financial system. Opening government procurement markets would limit the government's ability to advance equity and social justice by supporting SMEs, marginalised regions and groups. Seeking reckless access to raw materials would undermine governments' rights to regulate the use of raw materials and natural resources in favour of their people, exacerbate ongoing land displacement struggles and undermine people s rights for their habitats and produce. The deregulations of the movement of staff in transnational companies could trigger a shortage of trained labour in India and downward pressure on labour standards to the detriment of workers and communities in both countries of origin and destination. For the EU-India business summits, DG Relex wants to use the EBTC as a platform that can ensure continuity by working the ground between summits and preparing subjects and partners and making active contributions to the process of the CEO roundtable 20. In short: ensuring that the corporate elites from the EU and India speak out clearly with one voice to back the EU position. Hiring a consultant to pull the strings However, according to the EU delegation in Delhi, it might take a while before the EBTC is ready for the extensive networking required for the task 21. But it already is one of the partners of the upcoming summit in Brussels together with multinationals ING Bank, ArcelorMittal and TATA and the Indian industry associations, CII and FICCI. In the meantime, the Belgian employers' federation FEB-VBO, the main host of the upcoming business summit, has hired Brussels lobby veteran Eric Vaes and his consultancy Best Practice Corporate Affairs to help organise the event. Vaes has acted for multinational companies as well as BusinessEurope and the European Roundtable of Industrialists. He also has experience of bringing together bi-regional businesses in the context of the Asia-Europe summits (ASEM). And he ascribes himself a key interest in strengthening the EU as a global political & trade force 22. This makes Vaes the perfect match for the Commission's goal of forging a business consensus for a neo-liberal agenda in the trade relations with India. The fact that his consultancy is absent from the Commission's lobby register apparently wasn't considered a problem. The Commission has refused to release the emails that Vaes exchanged with DG Relex despite an access to information request by Corporate Europe Observatory 23. But other internal documents show that DG Relex, the Commission's trade department (DG Trade) and its delegation in Delhi have all been involved in preparations for the 'business' summit since February. The event's draft programme also bears their fingerprints: the Commission's pet CEO round table will focus on the free trade agreement and two of the most contentious issues in the negotiations for the deal: foreign direct investment and reciprocal market access 24. 3

The Commission has been trying to forge a compromise between EU and Indian businesses on these issues for some time. In 2008, the then EU Trade Commissioner Peter Mandelson asked BusinessEurope to mingle with India's big business federation CII and jointly lobby for radical tariff cuts and far-ranging services liberalisation. Last year, the then DG Trade director general David O'Sullivan made the president of India's software lobby NASSCOM, Som Mittal, promise to activate India's corporate elite in the services negotiations and to pass across strong messages to his interlocutors in the Indian government 25. But both issues remain contentious in the talks. Cutting the ties This year's EU-India business summit might help spark the necessary corporate support to conclude the EU-India free trade deal in 2011. The political elite including the presidents of the EU Commission and the European Council, the EU's Trade Commissioner and the Indian Prime Minister are all expected to attend. There is every reason to believe they will however continue to ignore the social and environmental 'side effects' of the planned trade deal from job and livelihood losses to increased transport flows and an intensified plunder of natural resources. But the threat to democracy is no less acute. Orchestrated by the Commission, a powerful transnational corporate-state alliance is evolving in the EU-India relations with virtually no public debate. Critical MEPs and civil society groups should put an end to the Commission's inappropriate role in this. And strip the EU-India business summit and similar fora off the outrageous privileged access they are granted to the policy process. 4

Notes 1 http://euindia.summitsfeb.be/about-euindia/presentation/ 2 Woll, Cornelia (2007): Trade Policy Lobbying in the European Union. Who Captures Whom?, http://www.mpifg.de/pu/workpap/wp06-7/wp06-7.html. 3 In the late 1990s, then Trade Commissioner Leon Brittan invited the chairman of Barclays Bank to set up the European Services Forum (ESF), which has been a driving force in the EU's aggressive global push for liberalised services markets ever since. More recently, the Commission set up a bi-regional business forum the Business Trade Forum EU-Southern Africa to provide active support for its controversial EPA negotiations with countries from Africa, the Caribbean and the Pacific. 4 Last chance to prevent onslaught on people's rights and livelihoods! Indian and European civil society groups call for an immediate halt to the India-EU trade negotiations, 5 October 2010, http://www.corporateeurope.org/globaleurope/content/2010/10/call-halt-eu-india-fta-talks. 5 Letter to Karel de Gucht, EU-India Summit and EU-India FTA negotiations, 1 st December 2010. 6 Email from Mikael Sami (DG Relex) to Commission colleagues about a meeting with Business Europe and the Swedish Business Federation on 25 March 2009, dated 26 March 2009; email from Roland Johansson (DG Relex) to Carlos Bermejo Acosta (EU delegation in New Delhi) about meetings with Eurochambres on 5 October 2009 and BusinessEurope on 7 October 2009, dated 7 October 2009. Obtained through access to documents requests under the information disclosure regulation. 7 Email exchange between Roland Johansson (DG Relex) and BusinessEurope's Eoin O'Malley, dated 30 October 2009, emphasis added. Obtained through access to documents requests under the information disclosure regulation. 8 Email from Mikael Sami (DG Relex) (see endnote 6). 9 Commission report of the 7 th EU-India Business Summit, 2006, Helsinki, October 12 th. Obtained through access to documents requests under the information disclosure regulation. 10 Email from Mikael Sami (DG Relex) (see endnote 6). 11 European Commission (2009): Note for the file. 10 th EU-India Business Summit, 6 November 2009, New Delhi, RELEX H3 D(2009) Ares 328146, dated 17 November. Obtained through access to documents requests under the information disclosure regulation. 12 Sickert, Ansgar (2010): FTA. Free Trade Agreement or Futile Talk and Agony, 15 March, in: The Wall Street Journal India, http://online.wsj.com/article/sb126863634241562269.html. 13 Email from Mikael Sami (DG Relex) (see endnote 6). 14 Ibid. 15 Delegation of the European Commission to India, Bhutan and Nepal, The Establishment of a European Business and Technology Centre (EBTC) in India for the European Business and Scientific Community. Guidelines for grant applicants, Reference: EuropeAid/126-732/L/ACT/IN, p.3, emphasis in the original. 16 Eurochambres (2010): News April 2010, www.eurochambres.be. 17 Eurochambres received 6,586,578 Euros and then another 5,000,000 for establishing the EBTC in Delhi in 2008 (contracts no. 160241 and 171678) and an additional 5,000,000 Euros in 2009 for establishing regional centres in different states of India (contract no. 224022), http://ec.europa.eu/europeaid/work/funding/index_en.htm. 18 Institute for Competitiveness (2010): The India Way. An interview with Poul V. Jensen, Director, EBTC, 15 November, http://competitiveness.in/2010/11/the-india-way/. 19 Delegation of the European Union to India (2010): Roundtable on EU-India Partnership. Address by Chief Guest Ambassador Smadja, 1 November, http://ec.europa.eu/delegations/india/press_corner/all_news/news/2010/20101101_en.htm. 20 Email from Mikael Sami (DG Relex) (see endnote 6). 21 Response from the trade and economic section of the EU delegation to India to a questionnaire on the role of interest groups in the EU-India free trade negotiations, 22 April 2010. 22 See his comment at http://crossick.blogactiv.eu/2008/01/27/the-2009-eu-troika/. 23 The Commission argues that 10 emails exchanged in June 2010 contain information about negotiations concerning the themes and the programme of the next EU-India business summit and that their disclosure could therefore be harmful for the preparation and realization of the summit. An access to information request for more recent exchanges sent on 5 November has not yet been answered. 24 EU-India business summit, 11 th edition, programme, http://www.businesseurope.eu/content/default.asp? PageID=568&DocID=27606. 25 Letter from Peter Mandelson to BusinessEurope's Philippe de Buck, 18 March 2008; European Commission (2009): Report of meeting between Mr O'Sullivan and Mr Som Mittal, President NASSCOM, 3 rd March 2009. Obtained through access to documents requests under the information disclosure regulation. 5