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India-EU leaders’ meeting gives new momentum to ties

Besides a huge symbolic relevance of the India-EU leaders’ meeting, the resumption of free trade agreement negotiations and connectivity partnership will provide a right momentum to strategic partnership 

May 10, 2021 / 03:30 PM IST
PM Narendra Modi'

PM Narendra Modi'

The India-European Union (EU) leaders’ meeting hosted from Porto, in Portugal, confirms that bilateral ties have come a long way since the first EU-India summit in 2000. Prime Minister Narendra Modi virtually met all the 27 EU leaders as well as presidents of the European Council and the European Commission.

Apart from outcomes, the symbolic value of such meeting cannot be underestimated. The EU rarely meets foreign leaders in this format. Ursula von der Leyen, President of the Commission described it not only a historic and landmark summit, but also a remarkable, outstanding and extraordinary meeting.

Apart from reaffirming broader issues agreed during earlier summits and announced under Roadmap 2025 last year, the major outcomes include resumption of FTA negotiations, connectivity partnership, artificial intelligence task force and a joint working group on resilient supply chains.

As core of the partnership is economics, the resumption of FTA negotiations has the potential to provide a new direction to EU-India ties. Negotiations on a comprehensive FTA started in 2007. The agenda included goods and services trade, investment, public procurement, intellectual property and competition.

Despite some disagreements in automobiles, wines and spirits, dairy products and movement of professionals, it seems goods and services negotiations were reasonably close. Unresolved issues also included data security and public procurement. After 16 rounds and widening gaps in ambitions from both sides, the negotiations were frozen in 2013.

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In recent months, Commerce and Industry Minister Piyush Goyal argued for an early harvest or an interim trade agreement along with re-starting FTA negotiations. This has been important as textiles, footwear, marine exports, etc. are affected by increasing exports to Europe from Bangladesh, Cambodia and Vietnam. However, he was not able to convince EU officials who have recently signed comprehensive FTAs with Japan, Singapore, South Korea and Vietnam. The EU is also negotiating ambitious FTAs with Australia and New Zealand.

It may take some time for actual trade negotiations to restart. Technically, resumption means both parties will resume talks from the point they disengaged in 2013. However, Brexit and the economic impact of the pandemic may push both parties to re-work their earlier strategies.

As conclusion of negotiations may take a few more years, both have agreed to start parallel negotiations on stand-alone agreements on investment protection and geographical indicators.

With close to $100 billion investment from its 27 member states, the EU is one of the largest investors in India. Similarly, many Indian companies have also invested in the EU. In the last few years, New Delhi terminated Bilateral Investment Treaties with large number of countries, including 21 EU member states.

It is hoped that an early investment protection agreement may remove uncertainty among EU investors. Some of the market access issues could also be negotiated under this deal. As the EU has recently signed a Comprehensive Agreement on Investment with China, a similar agreement with India can balance debates in European institutions. The EU-China deal took seven years to negotiate. Since India is liberalising FDI rules, it can be concluded early.

Negotiations are also proposed for an agreement on geographical indicators (GI). This was also part of comprehensive negotiations earlier. The EU and China have signed a similar agreement recently. For the EU, this is important for wines, spirits and agri-food products. About 100 EU GIs protected in China include Cava, Champagne, Feta, Irish whiskey, Münchener Bier, Polska Vodka, etc.

The connectivity partnership is likely to expand digital, energy, physical and people-to-people connections between Europe and India. It will help infrastructure projects within India and its neighbourhood. It could also be extended to Africa, Central Asia and the Indo-Pacific. This is broadly based on 2019 EU-Asia connectivity strategy and EU-Japan connectivity partnership.

Some may like to project it as a counter to the Chinese Belt and Road Initiative (BRI). Unlike the BRI, this partnership will mainly rely on multilateral and private sector finance. This collaboration can be further linked with evolving EU strategy on the Indo-Pacific and India- Japan initiative on Asia-Africa Growth Corridor.

As India has become global epicentre of the pandemic, 20 EU countries have sent oxygen, medical equipment and drugs worth $120 million in the last few days. But India is looking EU support much beyond immediate humanitarian aid. Despite the United States backing for temporary patent waiver for COVID-19 vaccines, the EU is still sceptical to the India-South Africa proposal at the WTO. The EU may need to look at the proposal as part of its development policy rather than its industrial strategy.

New Delhi has pronounced the leaders’ meeting as a watershed moment in the India-EU strategic partnership. As EU has full competencies in trade and investment matters, meeting outcomes can provide right momentum to bilateral ties.
Gulshan Sachdeva is Professor at the School of International Studies, Jawaharlal Nehru University, and headed the ADB and Asia Foundation projects at the Afghanistan Ministry of Foreign Affairs in Kabul. Views are personal.
first published: May 10, 2021 03:30 pm

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