Merkel renews push for free trade pact with India

German Chancellor Angela Merkel visits Continental Automotive Components’ plant in the northern Indian state of Haryana on Saturday. (Reuters)
Updated 03 November 2019

Merkel renews push for free trade pact with India

  • €1 billion pledged to help Indian cities switch to green transport

NEW DELHI: German Chancellor Angela Merkel said on Saturday there was a need for a fresh attempt to restart talks on finalizing a free trade agreement (FTA) between India and the EU.

Merkel who is in India along with several Cabinet colleagues and a business delegation, began talks with Indian Prime Minister Narendra Modi on trade, investment, regional security and climate change.

A free trade pact with India has been a long-pending demand from Germany which is India’s largest trading partner in Europe. The pact has been in discussion for years.

“We need a new attempt for an EU-Indian FTA. We were already close once,” Merkel said in New Delhi, adding that she held an intensive discussion about the FTA with Modi. “With the new EU-commission there will be a new attempt,” she said.

With more than 1,700 German companies operating in India, a free trade pact could help minimize the uncertainty experienced by German investors after an investment protection agreement between the two countries ended in 2016.

While addressing an audience at the Indo-German Chambers of Commerce, Merkel said she had an open discussion with Modi about problems faced by German companies and difficulties reported by small and medium enterprises to find way around the “bureaucracy labyrinth.”

In recent months German firms have raised a few other concerns, including slowdown in India’s auto sector, lack of stable policymaking and ad-hoc decisions which they say have affected buyer sentiment and created uncertainty among carmakers.

HIGHLIGHTS

  • Delhi has faced a mounting pollution crisis over the past decade.
  • Fourteen Indian cities including the capital are among the world’s top 15 most polluted cities, according to the UN.
  • According to one study, smog kills a million Indians prematurely every year.

Merkel said Germany will spend €1 billion ($1.12 billion) in the next five years on green urban mobility projects conceived under the new German-Indian partnership. It includes €200 million to replace diesel buses in Tamil Nadu state.

“These diesel buses are to be replaced by electric buses and anyone who saw the pollution in Delhi yesterday would find very good arguments for replacing even more of these buses,” Merkel said in the widely reported speech.

German funds will be used to finance several environment-friendly projects such as the introduction of electric buses to replace diesel ones used for public transport in urban centers.

Fresh funds pledged by Germany come at a time when pollution made the air so toxic in New Delhi that officials were forced to declare a public health emergency.

Photos of Merkel’s official visit show the visible effects of smog at the presidential palace — though both Modi and Merkel ignored the declared public health emergency and did not wear masks.

Merkel urged greater efforts to clean up New Delhi’s toxic air. 

She became a rare foreign leader to speak out on India’s smog crisis after being exposed to the capital’s air on Friday, when authorities said the pollution had reached “emergency” levels.

Schools were ordered closed until Tuesday and all construction halted, while Delhi authorities started distributing millions of anti-pollution masks to children.

Much of the new peak in the most dangerous PM 2.5 pollutants — particulates smaller than 2.5 microns that get into the lungs and bloodstream — has been blamed on fires lit by farmers to burn off wheat crop residues outside of the capital.


Oil recoups losses as OPEC, US Fed see robust economy

Updated 14 November 2019

Oil recoups losses as OPEC, US Fed see robust economy

  • US-China trade deal will help remove ‘dark cloud’ over oil, says Barkindo

LONDON: Oil prices reversed early losses on Wednesday after the Organization of the Petroleum Exporting Countries (OPEC) said it saw no signs of global recession and rival US shale oil production could grow by much less than expected in 2020.

Also supporting prices were comments by US Federal Reserve Chair Jerome Powell, who said the US economy would see a “sustained expansion” with the full impact of recent interest rate cuts still to be felt.

Brent crude futures stood roughly flat at around $62 per barrel by 1450 GMT, having fallen by over 1 percent earlier in the day. US West Texas Intermediate crude was at $56 per barrel, up 20 cents or 0.4 percent.

“The baseline outlook remains favorable,” Powell said.

OPEC Secretary-General Mohammad Barkindo said global economic fundamentals remained strong and that he was still confident that the US and China would reach a trade deal.

“It will almost remove that dark cloud that had engulfed the global economy,” Barkindo said, adding it was too early to discuss the output policy of OPEC’s December meeting.

HIGHLIGHT

  • US oil production likely to grow by just 0.3-0.4 million barrels per day next year — or less than half of previous expectations.
  • The prospects for ‘US crude exports had turned bleak after shipping rates jumped last month.’

He also said some US companies were now saying US oil production would grow by just 0.3-0.4 million barrels per day next year — or less than half of previous expectations — reducing the risk of an oil glut next year.

US President Donald Trump said on Tuesday Washington and Beijing were close to finalizing a trade deal, but he fell short of providing a date or venue for the signing ceremony.

“The expectations of an inventory build in the US and uncertainty over the OPEC+ strategy on output cuts and US/China trade deal are weighing on oil prices,” said analysts at ING, including the head of commodity strategy Warren Patterson.

In the US, crude oil inventories were forecast to have risen for a third straight week last week, while refined products inventories likely declined, a preliminary Reuters poll showed on Tuesday.

ANZ analysts said the prospects for US crude exports had turned bleak after shipping rates jumped last month.