EU and India leaders promised to take their trade relationship ‘to the next level’ as they met during a summit in New Delhi on Friday (6 October) – but with some strings attached.
“It is high time for a Free Trade Agreement between India and the EU,” said European Commission President Jean-Claude Juncker. But he insisted: “Once the conditions are right – and only once the conditions are right – we will resume.”
Chief negotiators will next sit down in November to chart a way forward, Juncker added.
India and the EU have been negotiating a bilateral free trade and investment agreement (BTIA) since June 2007 and have missed several deadlines to conclude the talks, due to unresolved issues mostly related to market access.
The EU is India’s largest trading partner with bilateral exchanges amounting to over €100 billion, accounting for 13.7% of India’s overall trade, ahead of China (11%) and the United States (9.6%)
Major EU exports to India include engineering goods (37.3%), gems and jewellery (19%) and chemical and allied products (10.7%). The primary EU imports include textiles and clothing (19.8%), chemical and allied products (15%) and engineering goods (15%).
Bilateral trade in commercial services – mostly business, ICT and travel services – has almost tripled over the past decade, increasing from €10.5 billion in 2005 to €28.4 billion in 2016.
— European Commission (@EU_Commission) October 6, 2017
“When it comes to trade, we are not starting from scratch – far from it,” added Juncker. “The trading of goods is almost perfectly balanced with exports and imports almost equal on both sides,” he stressed, underlying that this will remain true also beyond 2019, when the UK is supposed to leave the European Union.
Intellectual property and public procurement were the two stumbling blocks which have repeatedly slowed the talks. To move beyond the blockages the two partners set up bilateral discussions through enhanced cooperation and exchange of experience and best practices .
A trade agreement would create one of the world’s largest free-trade zones in terms of population – covering 1.8 billion, or nearly a quarter of the world’s people.
Germany has this year already called on India to get its act together in opening its domestic market and lowering tariffs for foreign goods.
Beyond the free flow of goods and services, the EU also wants to step up work to ensure the free flow of personal data.
Indian companies have specialised in offering back office and IT services to European companies. Many of these services – and the jobs that go with them – depend on the exchange of data.
“If India’s standards of data protection are converging with those of the European Union, the European Union will be in a position to recognise the adequacy of India’s rules. This is a precondition for exchanging personal data freely and securely,” Juncker stressed.
In August 2017, India’s Supreme Court ruled that data privacy is a human right, trying to smoothen the data dialogue in future.
European Council President Donald Tusk, who also attended the summit, said that “free and fair trade agreements are not only important for our companies and citizens to prosper, but above all they strengthen the rules based international order and our way of life.”
Brexit, a boon for closer relationship
With the UK leaving the EU, India is keen to adapt to the new realities of Europe and move forward with a stronger strategic partnership.
— Donald Tusk (@eucopresident) October 6, 2017
Partners in democracy
“We are the world’s two largest democracies. We are two of the world’s biggest economies. We share the same values and the belief that freedom, equality, tolerance and the rule of law. Working together with a like-minded partner like India simply makes sense. It is natural”, said Juncker.
Some MEPs have urged EU leaders to tie human rights to trade negotiations.
“Freedom of conscience is a human right enshrined in the Indian Constitution. However, this constitutional provision is often ignored and six Indian states, including Gujarat during the tenure of current Prime Minister Narendra Modi, at the time Chief Minister, have enacted laws that severely restrict or prevent the exercise of freedom of thought, conscience and religion,” MEP Lars Adaktusson wrote in an op-ed on EURACTIV.