India and the European Union continue to struggle to conclude a bilateral Free Trade Agreement even a decade after the negotiations were first launched in 2007.
Prime Minister Narendra Modi is in Europe this week for a six-day visit in which he will try to revitalise the economic ties between India and Europe. He will be in key European nations of Germany, Spain, Russia and France. And his agenda is very clear: enhancing India’s economic engagement with these nations and targeting more investment. This visit comes at a time when Europe is facing the unprecedented challenge of Donald Trump’s presidency in the US, which is not shy of going it alone on issues such as climate change and global trade. “The times when we could completely rely on others are, to an extent, over,” suggested German Chancellor Angela Merkel on Sunday, referring to the US and Britain, after meetings of NATO and the G7 group of wealthy nations last week. This means that the burden of leadership is greater on countries like Germany and India.
Free Trade Agreement
India and the European Union continue to struggle to conclude a bilateral Free Trade Agreement even a decade after the negotiations were first launched in 2007. Germany is pushing for the conclusion of the agreement. With the forces of globalisation in a seeming retreat, India and the European Union should “make it a point to speak up for free trade. And look for a free trade agreement,” suggested Germany’s ambassador to India, Martin Ney, recently.
After the last round of talks in 2013, there is a deadlock on issues including tariffs on automobiles and wines and spirits. India has an interest in getting a favourable package on services, including declared interests in Information Technology and the movement of Indian professionals. Market access for agricultural products, pharmaceuticals and textiles is also a priority for India. For the EU, concessions in the financial services are the key. The EU is also keen on the automobile sector where it is seeking a reduction in tariffs, much to the consternation of the Indian automobile industry, as well as a strong intellectual property regime.
The Bilateral Trade Investment Agreement will be very significant for India-EU ties as this will be the first Free Trade Agreement for India not merely focused on the liberalisation of trade but also of investment. The conclusion of this agreement will be important not only for India’s further integration into the global economy but also to a give a boost to India-EU ties, which have failed to achieve their full potential.
Despite the well-intentioned attempts by the EU to engage India more productively in recent years, there are significant constraints that continue to limit these ties from reaching their full potential. It took the EU very long to recognise that India also matters over the long-term and should be taken seriously. For long, the EU had single-mindedly focused on China, ignoring the rise of India in the Asia-Pacific. India’s rising economic profile, the US overtures to India, its growing role on the global stage from the United Nations to the World Trade Organisation, all have forced the EU to make it one of its strategic partners. The EU-India relationship is getting a long-term focus with the recognition that there are enough mutual benefits to ensure that small areas of friction are smoothed over.
The EU has been lukewarm at best to support India’s bid for a permanent membership in the United Nations Security Council. This is partly because different member-states have different views on this issue and partly because the EU is still testing the waters to see which way the wind will blow ultimately. This is despite the fact that the EU has been supportive of the UN attempts to reform its functioning and organisational structure so that it reflects the changing global realities.
EU must change mindset
Finally, and perhaps most importantly, there is the issue of the EU mindset which still views India as a regional South Asian power and continues to equate India with Pakistan. The tendency to equate India and Pakistan, which until recently affected Washington and marred all policy initiatives in the past, seems to be alive and kicking in Europe. Despite some belated efforts, the EU continues to see security issues through the old lens, trying to find a fine balance between New Delhi and Islamabad.
With the exception of France and Britain, member-states of the EU have not been enthusiastic supporters of the US-India nuclear deal as was clear from the initial deadlock at the Nuclear Suppliers Group. This granting of an extraordinary exception to India by the US did not go down very well with the non-proliferation constituencies in various EU countries.
As the centre of gravity shifts to the Indo-Pacific and the international system undergoes a profound re-ordering, the EU is trying hard to accommodate to these new global realities. The rise of China and India has presented the EU with several opportunities that it is trying its best to harness. But while trade and economics seems to have given the EU a reference point vis-à-vis the two Asian giants, politically it seems adrift as it is finding it difficult to speak with one voice on the political issues that confront the world today. Europe is finding it difficult to formulate a coherent foreign policy across the EU nations and this has made it difficult for the EU to respond as effectively to the rise of China and India as it would like to. Moreover, this is also a time when the EU is going through an identity crisis. Its very future is at stake and so all the energy of key European players such as Germany and France is to ensure the survival of the EU.
The EU’s lack of a strategic vision in defining its global role makes it difficult for it to respond effectively to new challenges such as the rise of India. New Delhi should leverage its growing economic and political profile in the international system to impress upon the EU that it is time for the EU to act seriously on its promise to make India a strategic partner. An expeditious conclusion of the India-EU Free Trade Agreement would be an important first step. Modi’s visit could act as a catalyst in this regard.
This commentary originally appeared in Scroll.
The views expressed above belong to the author(s).