India-EU : Trade Pact Talks

  • Obstacles in the trade pact between India and the EU.
Change in global dynamics:
  • Brexit
  • Elections in Germany and France
  • Visible rifts between eastern and western countries on what constitute core EU values
  • Election in the US and consequent retreat of the US from its leadership of the west
Key Points:
  • The reference to India and EU as “world’s largest democracies”- Such a statement is generally made with reference to sovereign countries. Interestingly, EU per se is not a sovereign country but a group of sovereign countries. Such a mention is more notable this time in light of the U.S.’s uncertain position on the international stage and EU’s need for a stronger union post Brexit.
  • The countries have reiterated their commitment for a “Rules based” and “Multipolar”world–
  • Rules based world: This term assumes significance on the backdrop of the US going back on its promises on Paris climate agreement and the probability of the same on the Iran Nuclear deal
  • Multipolar world: The reference to multipolarity is a recognition that there is more than just one chair at the top table, not just with the U.S.’s shifting position but also due to Russia and China’s ascent.
  • The India-EU joint statement on terrorism this year called for “decisive and concerted actions” against Hafiz Saeed, Dawood Ibrahim, Lashkar-e-Taiba and other purveyors of terror; this will further bolster India’s efforts to call out Pakistan on the issue of sponsoring terror.
Roadblocks in talks on BTIA:
  • Recent summits have been conspicuous by the absence of talks on the BTIA (Broad-based Trade and Investment Agreement). There is disagreement on whether the protection of foreign investments will be part of the BTIA or dealt with in a stand-alone treaty
  • Indian demand for liberalising the access to natural persons- India wanting a greater ease of movement of temporary skilled workers to provide services in the EU and the EU wanting greater market access for its automobiles and its wines and spirits. Wanting an open market for automobiles and liquor but unduly restricting the movement of natural persons (with barriers in terms of salary thresholds, recognition of qualifications, visa fees, social security and so forth) seems to be a case of double standards.
  • EU not granting “data secure” certification to India – a condition that facilitates the cross-border transfer of personal data. India does not have a stand-alone law on data privacy and this could be acting as a barrier too as EU is very seriously taking steps to secure digital data privacy of its citizens.
Way forward:
Convergence of values and interests:
  • EU is India’s largest trade partner (over 100 billion Euros in bilateral trade of goods and services last year). EU, like India, is also wary of China’s political and economic dominance.
  • Uncertainty over EU’s future in the next decade: With Brexit and other important developments, there is no clarity about what presence will EU have in the next decade. Hence, cementing trade ties with India will help strengthen EU’s economic future.
  • “Data secure” certification: India needs to enact a strong Data Privacy Law which protects the digital data privacy of its citizens. This is necessary to protect the economic interests of the Indian IT industry.
  • India is right to strike a hard bargain as far as the temporary movement of skilled workers is concerned. The EU and other developed countries have been historically reluctant about moving forward on this and the issue has become more challenging with the rise of populism and protectionism in Europe.

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