‘Hoping for progress on investment protection, GI pacts & India-EU FTA’
Spain is keen to expand its presence in the renewables sector, especially offshore wind and solar energy, along with ramping up its collaboration with India on defence and the transportation sector, and in facilitating the free trade agreement negotiations between India and the EU, Xiana Margarida Méndez Bértolo, Spain’s Secretary of State for Trade, Ministry of Industry, Trade and Tourism, who was in New Delhi last week, said. In an interview with Aanchal Magazine and Anil Sasi, she also said though Spanish brands such as Mango, Zara have already made a mark in India, other consumer-facing brands can make Spain’s outreach more visible and effective. Edited excerpts:
Q: You’ve had meetings with the Minister for Power and Renewable Energy, with the Secretary of Defence and the Secretary of Housing etc. How are you looking to build on this relationship with India?
A: With this visit, we wanted to build on some of the earlier visits at the highest level that have taken place in recent months…and now we are trying to have a bilateral agenda apart from the multilateral agenda in the G20…our President (of the Government) is going to come for the G20 Summit in September.
But apart from that, we want to resume all the contacts that we had before the pandemic. And one example of that is the meetings we are having… the Joint Commission for Economic Cooperation. Last time we had a meeting was in 2018, so five years later, finally, we’ll have the meeting again, which is very useful to identify barriers to trade and investment and then on a constructive agenda to identify areas for cooperation in different fields. Renewable energy, of course, transport but also science. And then we are also having the CEOs meeting, a preparatory one for the one that is to come probably in September and also a long time has passed since this meeting… So we have the multilateral agenda and the bilateral agenda then the agenda with the companies with both entrepreneurial communities and and then the one with the EU because the G20 presidency on the Indian side makes 2023 a very special year for your country and at the same time in the second semester, we are having the presidency of the European Council from the first of July to the 21st of December. So together we think it makes it easier for us to get in touch with India and make some progress on the FTA that you mentioned. Well 2-3 agreements: geographical indications agreement, investment protection agreement and then the FTA. Very different and paths also in difficulty but we will try to make progresses and that means that India is one of the priorities in our agenda for the presidency of the European Union. And the message that we are receiving from the Indian government is a will to negotiate, so we will engage with your government to negotiate and as I say, to make some progress in those three negotiations.
Q: What is the special focus in the defence sector between the two countries?
A: We have a powerful defence industry in Spain. We have different technologies in different fields of the defence industry. One is aerospace, of course, because we are part of the Airbus consortium. And the defence division is especially important in Spain, but also satellite vehicles for example and the naval industry. Nowadays there is not much naval industry in many countries in the world…Spain is one of the countries with a naval industry that is still competitive in the European Union. And that is true for the civil naval industry but also for the defence and even industry. So corvettes, submarines, platforms, all those types of ships, vessels. And I wanted to talk also to the Secretary for Defence because the contract that we have with Airbus for the provision of 56 C295 (a medium tactical transport aircraft that was designed and initially manufactured by the Spanish aerospace company CASA) is one very good example for Make in India, as 16 out of the 56 are being manufactured in Spain and other 40, which is the vast majority of the contract, are going to be manufactured here with a local partner. So that is a good example of the transfer of technology and long-term partnership that is what the Spanish companies want. That is a message we have conveyed to them for years and now we can see and we will see today in the business meeting when we talk about success cases.
Q: Some of the success stories are very important, especially consumer-facing brands. Is there a strategy to increase the visibility of Spanish brands?
A: Well, that is one of the purposes, one of the goals for the people to know that when they engage with the Spanish companies, they are well committed to the country with a long-term commitment wherever they invest… I guess that for example, Inditex (owner of the Zara brand) is a good example of consumer goods, that is something they can identify with Spain. Mango is another good example and it’s a company that is already present here. For the equipment goods is more difficult as it is a B2B business of course, the professionals know it but maybe not the public opinion. There’s a lot of that here in India, a lot of more industry and equipment goods, electrical material machinery, that is something that we export from Spain and that we are producing also here and that usually is less identifiable with our country, but professionals know. Something that we are always trying to boost is to identify Spain with technology in certain fields where we know we are competitive, and there’s a lot of expertise around the world, let’s say renewable energy, for example. We have the expertise for the development of projects because the Spanish firms have come a long way with solar and wind power energy, but they are also state-of-the-art technology developers in, for example, offshore wind power, which is something that is now growing here in India, in other countries. So, for renewable energy, we want the people to identify with Spain… Spain is a very reliable partner in that and green hydrogen. We will definitely become the platform for green hydrogen in the European Union in some years…infrastructure is a good example, defence sector is a good example because in the defence sector, strategic alliances are very, very important and reliability. So Spain is a neutral country to rely on… we are usually on good terms with the mass majority of the countries in the world. So that is something that we also want to boost, to promote. But especially Spain in technology.
Q: At what stage are your ties with India in the green hydrogen sector?
A: As far as the Spanish companies because this is not government to government, but the Spanish companies some of them are already present here in the renewable energy and for a long, long time, (Siemens) Gamesa is one example, Acciona is here with solar plants and also new companies such as Solarpack… So, the presence is already here. But one very promising area is offshore wind power generation. And some big Spanish international companies are coming into India, this is one of the priorities in the agenda for the Ministry of Energy. And the conditions in India are good… Green hydrogen is still something that needs a lot of investment and time to be a reality on a large scale. But we have some pilots in Spain, linked to fertilisers for example. And I was talking to the Minister of New and Renewable Energy and he told me that there are also some pilots here in India. So we can definitely share, the companies can definitely share their knowledge and technology and then come here and also produce. The industry link to that is also starting here in India such as the production for electrolyzers. That is something that we are also doing in Spain… We cannot develop the technologies in an isolated way that is not efficient, but we have to do it with reliable partners. So these kinds of alliances are a very important tool for the government, but also for the companies, so we will see a lot of that collaboration in the coming months.
Q: Given the global economic cycle and political atmosphere right now, like it is in G20, where Spain is a member, there are challenges in reaching a consensus. How is it impacting the trade cycle between the two countries?
A: Well, in the international context, it is very complex right now. Because we are still recovering from the pandemic of the countries, and we are facing some very concerning situations regarding, for example, the supply of cereals and food for some countries in the world. Some of that is caused by the Russian war in Ukraine, which is a very unfortunate situation and that is affecting not only Ukraine and Russia, but Europe and then all the world, but that is to say that the international situation is complex. And despite that situation, we should try to do our best to continue growing and recovering and providing for our population and I think that even in that situation, we can see that definitely India is going to grow at a very high rate this year. And also Spain will be one of the most dynamic economies in the European Union and among the advanced countries… So, we can see that, especially the external sector, is being one of the locomotives of economic growth in Spain. So we are convinced that through open trade, transparent trade and through the promotion of investment, inwards and outwards, our companies have been more resilient. They can resist incredible shocks such as the pandemic one and recover in a very short time. And continue exporting and importing to be more competitive and investing abroad and attracting investment. And that is key for Spain, to be open to trade and investment, to be more resilient and more competitive and even though these times are very difficult, we are seeing that the sector is contributing to this economic growth. I think that India also should promote this integration in international trade through the negotiation of this free trade agreement, for example of these agreements with the European Union as some of the economic growth won’t necessarily come from the internal market but also from international cooperation. We at least in Europe, in Spain, firmly believe in that because we have seen that our integration in the international economy is one of the keys for the economic growth and prosperity in Spain. So complex international situation but still two countries that are especially resilient in this moment and recovering and growing. So this year, next year, can be promising for our relations.
Q: There was some level of partnership for mass rapid transit projects with Spain some years ago. Are there other projects that have been identified in that area?
A: Yes. We had a meeting with the Secretary of Urban Development and Housing. In the first tranche of RRTS (regional rapid transit system), there’s a huge significant participation of the Spanish firms in design, engineering, technical assistance, and also for the design of some stations…but we are looking to the second and third as they are also interesting…some of the international firms such as Alstom have a manufacturing plant in Spain…and we also have two very important Spanish firms like CAF (Construcciones y Auxiliar de Ferrocarrilesr) and Talgo. They produce entirely in Spain but they are also collaborating with joint ventures to produce here in India once they are granted projects. So some of the Spanish companies are looking for partners…so we are following up very, very closely.
Q: What are the indications on trade, given that India currently has a positive balance of trade? What are the things that you’re looking at even as these FTA talks progress?
A: Integration in international trade makes it important, very important to have competitiveness, to bring technology in and to have the best inputs possible. And to be more innovative, because once you are facing international competition, then you have to try to be better. So importing is almost as important as exporting. And the most important figures for us usually is to look at the growth of exports, and also the number of exporters… That is a very important figure for us and especially to see if there are SMEs that are profiting from the free trade agreements. And so in this case, I see that even with that imbalance, we have to look at the components to see if it is a mutually beneficial trade flow, trade collaboration, but all in all I have to say that something that also we look at when we see those imbalances is if there any barrier to trade and in difficulties in accessing the market. So for example, the Joint Commission on Economic Cooperation is very important for that. Let’s say that we are trying, Spain is really powerful in the production and export of agricultural products, foods and beverages, vegetables and fruits, meat, and anything and provide for ourselves and we export…some fruits, for example, are facing difficulties in getting to the Indian market because of bureaucratic issues, registration or protocol. That is something that we definitely should solve. And that is going to have an impact also on the balance, but it’s going to be for the best because if we manage to export more food to India, it’s because the consumers in India want it or they need it…so it’s not that we are worried with the imbalance but with the reasons why we have imbalances and sometimes it might be important and sometimes it is not.
Q: When you talk about barriers to trade, the proposed carbon tax may act as an incentive for certain industries here, but some see it as a burden also. So how do we see that especially for an emerging economy like India?
A: I can understand the concern because it’s a very sophisticated instrument and it’s something very, very new. From Spain our concern, conveyed to the Commission, was to look for the compatibility with WTO rules. So the Commission made sure that it was compatible with WTO rules. The final goal is climate change, to fight against climate change, and also look for this level-playing field where European companies face high energy prices and high carbon emission right prices. So, this one wants to make sure that through delocalisation of some industries, we are not delocalising pollution and some hypercritical strategies don’t make the pollution go to other countries, developing countries and then come through under the way of importing the final product. So, there’s no deviation of pollution and carbon emission. That’s the sole purpose. It can’t be an excuse for protectionism. And we want to make sure that it is not that way. So from Spain, that was the message we conveyed to the European Commission and finally we have an instrument that is sophisticated and complex to apply, but at the same time, we will make sure that climate change, which is a global challenge, is faced also in a global way. And we will love some other countries and third countries to consider that instrument in order to work to apply similar instruments… we have to find cooperative ways to face climate change. There’s no way we can do it alone. So even if some countries may see that as a protectionist measure, it is not. It’s an environmental measure. It has to be that way. If you see the text, it is like that and we have to follow up and see the way it is applied to make sure it is not a protectionist measure.