Can the EU hope for forward-looking language on at least a limited trade deal between India and the EU?, writes Amb Bhaswati Mukherjee (retd) for South Asia Monitor
The wheel has turned full circle for India EU relations. From the 1st summit held in June 2000 in Lisbon under Portuguese Presidency with PM Antonio Guterres at the helm (presently UNSG) to the 16th summit being planned in Portugal in May 2021, India and the EU have traveled a long way.
In the shadow of COVID-19, which has roared back a second time in Europe, the EU is truly at the crossroads. Brexit, as well as the EU/UK trade deal which pleases neither party, is over. Long and tortuous negotiations preceding Brexit have cooled the sentiments of separatism of many Euro skeptics within the EU. However, the difficult dilemma of reconciling nationalism and conservatism at the expense of closer EU integration is ominously present.
EU-India summit in May
The 16th summit is expected to re-calibrate the strategic relationship after Brexit. Contrary to the popular perception within the EU, encouraged by the UK, India never looked at its relations with the EU through the prism of its bilateral relationship with its former colonizer, the United Kingdom. This needs to be reiterated by India at the summit.
There will be other changes brought about by Brexit. It was the UK with its opposition to the mobility of professionals, a key Indian demand that was a key reason for the stalemated BTIA (Bilateral Trade and Investment Agreement) negotiations. Again, it was Britain's America and NATO first’ policy before President Donald Trump’s tempestuous arrival on the global scene was the principal impediment to a more muscular EU foreign and security policy. India’s preference for hard power in a strategic alliance could finally result in closer military and defence cooperation.
Threat from China
There is also a major irritant clouding the preparations. The sudden ardour for a closer trade and business partnership with China, the EU’s most important trading partner, has raised doubts among Indian policy planners about the EU’s understanding of the threat that China poses to the liberal Western order. The new Joe Biden Administration has drawn the required red lines but not the EU. Why? This needs to be discussed and India’s concerns taken on board.
Under strong German pressure, an EU-China trade agreement was pushed through in the final moments of 2020 as Germany’s term in the rotating seat of the EU Presidency came to an end. German Chancellor Angela Merkel, whose country’s automobile and industrial sectors are eager for Chinese market access, was instrumental in its acceptance by a reluctant EU leadership.
These developments have raised disquiet among members of the Quad, including India, of the conflicting signals of the EU on a uniform China policy. In 2020, the year of the Wuhan virus, China repressed a pro-democracy movement in Hong Kong, made threatening noises on Taiwan, repressed minorities in Xinjiang started ‘nibbling’ Indian Territory in Eastern Ladakh and tried to bully Australia and its neighbours. The timing of the deal could not have been more awkward or inopportune.
The EU is likely to raise the prospect of a trade deal. This becomes more urgent after Brexit. EU would be justified in pointing out that long stalemated negotiation on the BTIA (Broad-based Trade and Investment Agreement) represents an irritant in the common quest to discover a new strategic paradigm. There had been speculation of India doing separate trade deals with the USA, the EU and the UK so as to entrench themselves in the global supply chains. Can the EU hope for forward-looking language on at least a limited trade deal between India and the EU?
A BTIA seems unlikely. India needs to overcome significant challenges in the area of trade policy before a BTIA with the EU can be concluded. A limited trade deal, based on the principle of picking the low-hanging fruit, seems more doable.
A major handicap is the lack of understanding among Indian policymakers and its trade negotiators on the benefits of a dynamic trade policy. India has many apprehensions including the legally binding clauses on human rights, social and environment, as well as labour standards.
The negotiations have reached a roadblock on whether the EU will liberalise its visa regime for Indian professionals. India’s demographic advantages have provided it with a skilled, competitive, and English-speaking workforce which the EU lacks and urgently requires for its industry because of its declining population. Will the EU agree?
Perhaps it is time for India to re-evaluate its approach to Free Trade Agreements (FTA). Trade contributes to prosperity but challenges do need to be managed, not avoided.
India's Housing and Urban Affairs and Civil Aviation Minister Hardeep Singh Puri had pertinently noted: “Trade and foreign policies must by and large be in sync. The world of trade policy requires to give and take. Negotiations for an FTA with the European Union have been languishing since 2007. The European Union is India’s largest trading partner, accounting for 13 percent of India’s total share of goods and services. A good indicator of a country’s external engagements is whether its foreign and trade policies reinforce each other. India has struggled with a foreign policy segment that seeks strategic content with its trading partners and a trade policy segment that is more circumspect and inward-looking, often for good reason.” (February 2017)
Both sides are committed to a successful summit. Prime Minister Narendra Modi had noted after his second swearing-in that the India-EU partnership is based on shared values like democracy, respect for rule of law, multilateralism, rules-based trade, and rules-based international order.
Deeping of strategic partnership
The timing of the 16th Summit is important. A G-7 Summit, to which India has been invited by British Prime Minister Boris Johnson, is due in St. Ives, Cornwall, in June 2021. Many important developments including a possible return of Iran to the nuclear accord, developments in Afghanistan as well as the USA’s return to the climate change accord will be discussed in both summits.
The India-EU Joint Statement and press release which are being discussed are expected to reflect a deepening of the strategic partnership. The EU will express support for the Quad and reaffirm the security of navigation in the Indo-Pacific.
The moment is opportune for both sides to rise to these formidable challenges to international peace and security. This high stake narrative should become a win-win for India and the EU.
(The writer is a former Indian ambassador and an expert on European affairs. The views are personal)