India-EU summit: New dynamics and an FTA in the making

The 16th India-EU summit, though virtual, marked a watershed in India’s foreign policy, as far as engagement with the West is concerned, writes Amb Bhaswati Mukherjee (retd) for South Asia Monitor

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Indian PM Narendra Modi participates in the India-EU Leaders’ Meeting through video conferencing

It was to have been a summit like no other. To mark the historic anniversary of 21 years of annual India-European Union summitry - the first having been held in June 2000 under a Portuguese presidency -  the invitation to Prime Minister Narendra Modi to meet the entire EU leadership, in Porto, Portugal for the 16th Summit had been a carefully crafted strategy.

The timing of the 16th summit was important. A G-7 summit, to which India had been invited by UK Prime Minister Boris Johnson, was due in St. Ives, Cornwall, in June 2021.  Many important developments including a possible return of Iran to the nuclear accord, developments in Afghanistan following the American pullout as well as an Indo-Pacific strategy was expected to be on the agenda of both meetings.

The backdrop

Indian policymakers had been concerned by the EU-China trade agreement, 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 an ambivalent EU.

The Indian leadership realized that to decouple the country’s economy from China, and having turned its back on Regional Comprehensive Economic Partnership (RCEP), a positive signal must be given to the EU on trade liberalization and a Free Trade Agreement. This would strengthen the commercial and businesses connect and enhance the trade and FDI flows. EU on its part could then become more receptive to India’s suggestion to collaborate on an Indo-Pacific security framework. These concessions offered by India were carefully worked out in advance with Brussels.

Post-Brexit, the EU wished to send positive signals on the strength of the strategic partnership. The European Commission was understandably wary and cautious about the Broad Based Trade and Investment Agreement (BTIA).  Even before the 15th summit, they had in their internal and public documents decoupled the BTIA from the strategic partnership so that it would not become an obstacle to progress on other issues.

The summit became a victim to India’s deadly second wave of Covid 19. A virtual summit, aptly termed a "hybrid format" in the Joint Statement, was expected to be high only on rhetoric. It, however, had many surprises and positive results and can be termed as an outstanding success. A letter reportedly sent by External Affairs Minister S Jaishankar on the eve of the summit to the EU leadership underlined how carefully India had set the stage for its success.

Key takeaways

Human rights was another contentious issue.  Here, too, some positive steps forward may be noted.  One of the most significant was the continuation of a newly resumed Human Rights Dialogue with the next one scheduled in 2022.  Such a dialogue would address and counter the current anti-India propaganda in the western media, feeding European public opinion on a daily diet of so-called Indian mismanagement of the second Covid wave, the sufferings of oxygen starved patients, the nonstop cremations and much more.

Trade remains the biggest breakthrough. The language was carefully crafted.  Both sides “agreed to resume negotiations for a ... trade agreement which would respond to the current challenges." This came with an important rider, noting: “We agreed that in order to create the required positive dynamic for negotiations, it is imperative to find solutions to long-standing market access issues”. This identified an important obstacle that had led to the stalled talks since 2007.
 
A 2020 study by the European Parliament put the benefits of a trade deal for the EU with India at up to 8.5 billion euros (USD 10.2 billion), although the estimate was a pre Brexit one. The stakes are too high for any side to ignore. Both sides decided to move ahead.

Important concessions were made by the Commission. For a long time, Brussels had rejected the concept of a Free Trade Agreement without including investment. The Commission finally blinked and agreed to a separately negotiated investment deal. India had long argued that the BTIA was too ambitious and far-reaching in scope, given that it would be between an emerging economy and a highly developed multi-state entity with such differentiated levels of development.  It would appear that the Commission on its part did take one step gingerly forward.

Another significant concession by India was to agree to launch negotiations on an accord on geographical indications - famous brand names often linked to the places where they are made, from France's champagne to India's Darjeeling tea. This was a long-standing demand of the Commission.

Other positive takeaways include work in progress to combat climate change under the India-EU Clean Energy and Climate Partnership. Both sides “welcomed the first meeting of the India-EU High-Level Dialogue on Climate Change, held on 28 April 2021 in preparation for the Leaders’ Meeting.

A significant shift in the EU’s position on China and the BRI (Belt and Road Initiative) was a very positive outcome of the summit. Despite the EU-China 17 plus 1 dialogue (Cooperation between China and Central and Eastern European Countries) EU and Japan agreed in 2019 to find an alternative to the BRI. As a result, the EU invited India to build joint infrastructure projects around the world, notably in Africa, described as a Connectivity Partnership.

Some disappointments

Where the summit fell far short of expectations was the EU’s response to vaccines and a WTO patent waiver for India on the Covid vaccines.  Due to German pressure, despite US endorsement, the Joint Statement was silent on the South African initiative in WTO to suspend temporarily the TRIPS provision on patents. This was a great disappointment and once again demonstrated the need for the EU to appreciate India’s core concerns facing a once in a century pandemic.

The Joint Statement did not go beyond stating: “We supported universal, safe, equitable and affordable access to Covid 19 vaccines, diagnostics and treatments…….Recognizing the role of extensive immunization as a global public good and concurring that the vaccination process is not a race amongst countries but a race against time, we welcomed the EU’s and its Member States’ contribution to vaccines’ production and their substantial support to the COVAX Facility, as well as India’s efforts to produce and distribute Covid 19 vaccines to over 90 countries through its ‘Vaccine Maitri’”.  It added: “The EU invited India to work towards an international treaty on pandemics within the framework of the WHO. In this context, we look forward to a successful Global Health Summit in Rome on 21 May 2021, co-hosted by the EU and Italy in the framework of the G20”.

Another setback was on a possible joint Indo-Pacific strategy. India had been optimistic about a breakthrough, given individual support by key EU countries, especially France. The difficulty is the lack of a united EU position.  Central European and East European countries seemingly ignore the threats posed by a rising militaristic China to core Western interests. They privately refer to such concerns as "a bilateral issue between India and China due to the colonial legacy". As a result - and led by Germany, whose pro-China agenda is driven by its automobile industry - the section on a possible EU and  Indo Pacific strategic collaboration was couched in stiff and bureaucratic language with an ominous silence on the Quad.

The Joint Statement did not go beyond stating: “We emphasized our commitment to a free, open, inclusive and rules-based Indo-Pacific space……. In this context, we welcomed the development by the EU of its Strategy for cooperation with the Indo-Pacific and agreed to strengthen our cooperation in the Indo-Pacific region, including in the Asia-Europe Meeting (ASEM) and in relevant regional fora. The EU appreciated India’s Indo-Pacific Oceans Initiative, which intends to promote international coordination and cooperation in the Indo-Pacific region”.

A watershed

The 16th India-EU summit, though virtual, marked a watershed in India’s foreign policy, as far as engagement with the West is concerned. India now recognizes that in the new emerging world order, hastened by Covid 19, the EU can play an important balancing act, like the Quad, to contain China. To do that, India needed to reassure the EU on trade, since Brussels earlier used to cite its trade ties with China as the reason for its ‘China First’ policy. This new pragmatic approach was greatly appreciated by the Commission.

The new foreign policy was a breakthrough. India would have to, in the words of Jaishankar: “Engage America, manage China, cultivate Europe, reassure Russia and bring Japan into play”. The 'cultivation’ of Europe and the EU was long overdue. With efforts on both sides, it could finally bloom into a strategic partnership that both sides need and deserve. 

Has India finally re-discovered Europe? This was a long-awaited awakening.

(The writer is a former Indian ambassador. The views are personal)