EU-India: Getting the bilateral compact right

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The latest EU-India summit managed to touch upon the political dimension of the partnership, yet there are still several issues which remain to be resolved, writes Gauri Khandekar.

Gauri Khandekar is a researcher at the Brussels office of the Madrid-based FRIDE think tank and head of its Agora Asia-Europe programme.

"The 12th EU-India summit held in New Delhi was a fresh sign of the EU’s renewed political engagement towards its strategic partnership with India. While bilateral trade has grown over the past few years (20% in 2010 alone), overall political relations have been under-performing. Low levels of mutual understanding and political presence in particular have been key factors.

This year, however, the presence of key EU officials during and in the run up to the high-level meeting showed a willingness to re-balance the political dimension of the partnership. For the EU, the summit was an important opportunity to reassure its Asian partners that measures are being taken to recover from the crisis and restore market confidence in the euro.

Beyond its customary catalogue of policy issues, the summit managed to define and build on three priority areas of cooperation – energy, security and trade. Leaders agreed on a security agenda for 2012 in order to reinforce cooperation on counter-terrorism, cyber-security and counter-piracy. In January, the EU and India had already held a Joint Working Group on Counter Terrorism and in December 2011, talks on anti-piracy cooperation successfully widened activities to joint military operations in the Indian Ocean.

During the summit, a Memorandum of Understanding on Statistics was signed, as well as two important declarations on Enhanced Cooperation in Energy and on Research and Innovation Cooperation. The former will strengthen cooperation in the field of renewable energies (off-shore and nuclear), clean coal technologies, energy efficiency of products and buildings, grids (including integration of renewables), as well as promote energy security, efficiency and safety in a sustainable manner.

At the same time, it will address India’s development challenges by increasing access to electricity for hundreds of millions of Indians and alleviating chronic power cuts. The initiative will also reduce fossil fuel emissions.

While a future innovation partnership was underscored, the joint declaration on research and innovation will expand the scope of existing strategic cooperation beyond water and bioresources to energy, health and information and communication technologies. India is already the EU’s fourth largest international partner under its 7th Framework Programme for Science and Technological Development (2007-2013). Although, the EU-India R&D Agreement on Civil Nuclear Energy (Fission) remains elusive.

On trade, intense negotiations in the months preceding the summit, as well as High Representative Catherine Ashton’s recent visit to India, managed to advance talks on the paramount free trade agreement. Nonetheless, an expected political agreement of sorts failed to materialise.

EU Commission President José Manuel Barroso spoke of an accord by autumn, but Indian Premier Manmohan Singh gave no such indication. Differences regarding key sectors are holding up the final stages of negotiations. The services sector remains an important impediment. For India, gaining market access in services is becoming increasingly more important than that for goods given its fast growing skilled workforce.

While India, with growth rates reaching 7%, recognises that European recovery remains vital for global economic stability, it is unwilling to commit financially. European Council President Herman Van Rompuy’s efforts to convince Singh of a sound investment opportunity in the co-investment fund that would help the eurozone debt crisis have so far brought little concrete results. India referred instead to the G20 and the reform of the international financial governance system.

At the same time, the summit was not short of controversies. The EU pressed India to change its position and support EU-US sanctions on Iran which seek to plug Iran’s oil revenues in an effort to persuade the country to abandon its alleged nuclear weapons programme.

But Iran is India’s second-largest crude oil supplier after Saudi Arabia, providing around 12% of India’s oil imports and is an important trade partner.

While India has accepted UN sanctions, it has refused to support EU-US sanctions, and seems keen on exploring opportunities only once the EU and the US are out of the picture. Other conflicting issues include extending European Emissions Trading System to airlines, denounced by India, China and the US.

The EU-India relationship stands at the threshold of transformation and much will depend on how much both sides are able to maintain political momentum. A conclusion of the FTA remains crucial. Trade should continue as the main priority and the fundamental basis of the partnership in a world increasingly run by geo-economics.

Reciprocal visits from Indian politicians to Brussels are called for to increase the EU’s visibility in India, but also to create a better understanding of each other’s role in the new developing global architecture. As the EU and India enter a new phase in relations, getting the bilateral compact right appears a key precondition."

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