EU and India set to relaunch negotiations on trade agreements
The EU and India plan to relaunch long-stalled negotiations on a comprehensive trade deal as they seek to deepen economic ties and respond to China’s rise to power.
The two parties could announce on Saturday the relaunch of negotiations which were suspended in 2013 due to disagreements on tariff rules for auto parts and the free movement rights of professionals.
The resumption of talks between two of the world’s largest economies has become a priority for both sides in recent months as they grapple with the challenges posed by the rise of China and its model of capitalism backed by the ‘State, and the economic damage caused. by the coronavirus pandemic.
This decision was discussed during an appeal launched Monday morning between the president of the European Commission, Ursula von der Leyen, and the Indian Prime Minister Narendra Modi, according to a senior official of the commission.
Assuming the committee does not encounter any last-minute problems with New Delhi or resistance from EU member states, the resumption of talks will be announced after a virtual EU-India summit in Porto on Saturday. “There is optimism, but this is not a done deal,” said an Indian government official.
Along with relaunching trade negotiations, Brussels and India planned to launch negotiations on a separate investment treaty and an agreement to protect regional food specialties, the commission’s senior official said. The two sides are also working to improve their infrastructure connections.
“There is a clear dynamic to strengthen our strategic relationship on trade, digital, climate change and multilateralism,” Von der Leyen wrote on Twitter after Monday’s call. “I am encouraged by the prospect of intensifying our trade and investment relationship.”
The new momentum comes as the UK struggles to strike its own trade deal with India.
Previous attempts by the EU and India to reach a pact have failed despite intensive work between 2007 and 2013. Problems encountered included India’s reluctance to facilitate access for EU lawyers and to further open up its market to European auto parts. New Delhi was frustrated by the EU’s reluctance to offer more generous rights to its professional service providers to work in Europe.
“It is a difficult country to negotiate because it is quite protectionist,” said David O’Sullivan, former director general of trade at the European Commission. “They tend not to enter into massive liberalization trade deals. If you look at everything they’ve done, they’re not what we would call deep and complete. “
O’Sullivan noted that there would be a “first-come strategic advantage” for the EU in reaching a deal. “We would be the first bloc to conclude a full FTA. This is a reason in itself to look at all the specific issues. [in the talks] with a little context, ”he said.
Trade Secrets is FT’s essential daily briefing on the changing face of international trade and globalization.
Sign up here to understand which countries, companies and technologies are shaping the new global economy.
Officials believe the prospects for a deal are now brighter than they were 10 years ago, as India seeks ways to respond to China’s growing economic strength in the region. Last year, New Delhi decided not to join 15 other countries, including China and Japan, in a regional economic partnership.
“It was a game-changer,” the senior commission official said. “We are seeing geopolitics change,” adding that there was now more “political momentum” behind the talks.
The senior official said progress in the negotiations would depend on confidence-building measures on the Indian side on market access, including the smoothing of movement rights for European professionals to visit production plants in India.
“I hope if they do it again, there is reason to be optimistic that we can do a little more to seal the deal,” O’Sullivan said. “This would send a positive signal to the global community and to the India-Pacific strategy.”