India, EU Reach Agreement on Five-Year Most-Favored Nation Status in Trade Deal

India-EU Free Trade Agreement Update

Key Highlights

• The European Union and India have agreed to grant each other Most-Favoured-Nation (MFN) treatment for a period of five years from the entry into force of the free trade agreement.
• MFN treatment ensures that listed sectors, services, and service suppliers of each party are treated at least as well as those from any other country, subject to certain limits and conditions.
• Exclusions from MFN treatment include provisions related to taxation treaties, recognition of standards or authorisations, and dispute settlement procedures.

Trade in Services Chapter

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• The MFN treatment was included in the Trade in Services chapter of the FTA text, which was made public on January 27.
• A Joint Committee will review developments concerning the entry and stay of Indian students in the EU, their work rights, and arrangements for the temporary movement of service suppliers in the fourth year.

Review and Renewal

• The Joint Committee will decide whether to continue MFN treatment beyond the initial five-year period based on the review.
• Parties may request further review if circumstances adversely affect their interests.
• If the Committee decides not to continue the treatment, the obligation to extend MFN treatment will cease, though benefits already granted remain unaffected.