By Pieter Cleppe
The President of the European Commission, Ursula von der Leyen, and the Prime Minister of India, Narendra Modi, have agreed to launch the EU-India Trade and Technology Council at their meeting in New Delhi.
The European Commission declares in a press release:
“This strategic coordination mechanism will allow both partners to tackle challenges at the nexus of trade, trusted technology and security, and thus deepen cooperation in these fields between the EU and India.”
Mark Linscott, a nonresident senior fellow with the Atlantic Council’s South Asia Center, comments on the website of the Atlantic Council:
“Brussels appears focused on taking its bilateral economic relationship with New Delhi to the next level. In addition to establishing a Trade and Technology Council, the two sides are also restarting negotiations on an FTA, which launched in 2007 but petered out by 2013. The EU recognizes that such a pact would be a global game changer, given that India is set to become the world’s third-largest economy within the next decade.
Japan, South Korea, and the ten-member Association of Southeast Asian Nations (ASEAN) all have FTAs with India. Now, the EU believes its own FTA can promote increased integration with the Indian economy and advance pressing global economic and strategic interests—not the least of which is weaning India off its over-reliance on Russia, particularly when it comes to weapons, as a strategic trade partner.”
He stresses: “Not all aspects will be easily accomplished. Here are four key points to watch as the EU continues courting India:
Trade negotiations with India are not straightforward. There is plenty of history to the EU-India FTA negotiation—and the hard parts aren’t likely to be ironed out quickly, even now with the new strategic impetus at play. Compromises on trade in the automotive industry, agriculture, and services (including visas for professionals) will be hard won on both sides and likely will take time.
Momentum matters, but the agenda is complex. The earlier collapse of EU-India FTA negotiations was barely noticed, and both sides readily abandoned them. But while the the stakes are now higher, we should still expect a slow negotiation process. Politically, the EU needs strong commitments in areas such as labor and environment, subsidies, and intellectual property rights—which India is likely wary to offer, as it sees these issues as more tertiary to trade interests.
There are implications for the United States, too. The Biden administration, which has assessed that FTAs are too costly politically, needs to take notice and recalibrate its own position. Its concern has merit, but it has wrongly argued that FTAs undermine US economic interests. Witnessing the EU negotiate better access to the Indian market than what US exports get could strengthen the argument for the United States to develop its own FTA agenda (although this is not likely until after the midterm elections in November).
But will an EU FTA prove a bridge too far? Since abandoning the Regional Comprehensive Economic Partnership with China, Japan, ASEAN, South Korea, Australia, and New Zealand in 2018, India has moved aggressively to negotiate bilateral FTAs, seeking trade alliances in which it can pursue substantial export growth. India just concluded FTAs with the United Arab Emirates and Australia, and could do the same with the United Kingdom by the end of year. But shared strategic and economic interests with the EU do not assure that an FTA negotiation will be successful, and only time will tell whether this negotiation suffers the same fate of previous efforts between the two.”
Also addressing the topic, German ECR MEP Lars Patrick Berg, comments:
“The EU and India have agreed to establish a joint trade and technology council, to resume negotiations on a long-term freetrade agreement between the EU and India, as well as achievea free and open Indopacific to strive for it.
In her speech, the focus of Ursula von Leyen’s speech seemed to deal less with the actual issues of the Indopacific space than with attempting to push India to take a side in the context of Russia’s aggression towards Ukraine. For a country that was a leading member of the non-aligned movement during the Cold war, this would be quite a change. India is a strategic partner of the EU. I hope that we will succeed in deepening and strengthening our relationship.”