The EU wants New Delhi to raise the quota of about 80,000 cars it could export to India under a reduced tariff, some of the people said. New Delhi, meanwhile, is seeking an easing of duties on some steel products exported to the EU and wants flexibility around [the CBAM].

While both sides made another political push after the summer break to finalize the deal, technical issues remain. The final outcome will likely be an agreement that’s more limited in terms of its ambition compared with others concluded by the EU in recent years, the people said.

Negotiations are now likely to stretch into next month, with both sides still hoping to clinch a deal that can be announced when Commission President Ursula von der Leyen leads a delegation to New Delhi in January, said the people, who spoke on the condition of anonymity.

According to the press note, both sides are now in the process of securing internal approvals for the final deal. However, according to sources, this is more of a formality, with the deal having been finalised and the signing set to happen soon.

The reality is that the DCC is currently being negotiated, pursuant to side letters exchanged at the time of CETA's signing committing the two parties to ensuring that the CETA and the DCC enter into force simultaneously.

Also notable is the government's response concerning the India-UK Double Contributions Convention (DCC). Since the signing of the CETA in July, several newspapers wrongly reported that the DCC has been signed.

Importantly, the government has stated that no legislative changes are required to implement the CETA. Tariff concessions and preferential rules of origin will be notified under existing laws, as is done for other trade agreements.

The review will also set up a subsidy scheme for exporters to ensure that they are not undercut [..] when selling in third countries. But negotiations are ongoing as to the source of the financing as [CBAM] proceeds [..] are already [..] committed to other parts of the [budget].

The commission is currently deciding in a separate process how to calculate the amount of tax that importers will have to pay for products that do not pay an equivalent carbon levy.

The products that will be included will be decided on the basis of the amount of CBAM material they use and how much risk there is that they could be produced outside the bloc, EU officials said.

The aim of extending the [CBAM] to downstream products, as well as raw commodities, is to prevent importers setting up facilities in Turkey or other neighbouring countries to process CBAM materials into finished goods before importing them in order to get around the charge.

If the government remains committed to the CCTS, better implementation is required. Building a functioning carbon market requires deep knowledge in financial markets, public finance, economics, and trade law. We should not assume that notification of a scheme equates to the solution of the problem.

The resulting treaty with the UK gave headlines, but it was not a deep trade agreement. It did not integrate markets in a way that reduces friction for high-value exchange. As we turn our eyes to the EU, we must avoid this mistake.

Substantial diplomatic capital was expended in [talks with UK], with an objective to seek exemptions from carbon adjustments. This was a misallocation of effort. A deep FTA cannot be obtained when one seeks to carve out exceptions to fundamental fiscal principles like VAT or carbon border pricing.

Congratulations Prof!

The Indian Express had reported that India had pitched for a similar provision in the trade deal with the UK to ensure that when London introduces its version of CBAM, it does not impact the concession won by India under the trade deal.

On the [CBAM], India has introduced a ‘rebalancing’ provision, as it is unlikely that the EU is willing to give [India] a concession. The rebalancing provision would mean that if Indian products face a restriction in EU market access, India will subject EU products to restrictions in equal measure.

With the deadline approaching, both partners have also likely dropped a few sensitive chapters, including one on state-owned enterprises, as New Delhi was not on board with putting the same on the negotiating table.

A key virtual stocktaking meeting between India's Commerce Secretary and the EU’s Directorate-General for Trade took place on Friday [..] While 10 out of 23 chapters have been closed, key issues, particularly related to ROOs and market access that include agriculture, remain pending [..].