The 14th Summit between the European Union (EU) and India was held in Delhi, India on 6th October 2017. This was a summit that showed signs of the current changes within EU itself coming to bear on its approach with other countries. EU is keen to have an FTA with India as it prepares to lose a member country (after the British exit from EU) in the foreseeable future. Meanwhile, UK is itself eager to have an FTA with India after it steps out of the EU. So Brussels and London are both vying for a trade deal with New Delhi. EU is also attempting to bring to life ambitious FTAs at the bilateral level with other countries, such as the CETA with Canada provisionally entering into force in September 2017. But in general trade and investment liberalization policies are becoming unpopular with people across Europe, particularly in the backdrop of the 2008 crisis. People’s mobilization against both CETA and TTIP (with USA) are examples of this.
Meanwhile, across Europe there is a decline of the European Centre-Left, including post-general elections in EU’s strongest economy Germany that also drives much of EU policy. This could reflect in the kinds of demands it makes in its FTA negotiations.
Processes of Partnership
The holding of summits with regularity is about having a mechanism for dialogue between the two sides. The 1st EU-India Summit was held in 2000. A ‘Joint Initiative to Enhance Trade and Investment’ was discussed at the 2001 and 2002 Summits
Talks for the EU-India bilateral trade and investment agreement (BTIA) had commenced in 2007. Despite a dozen summits, talks on the proposed FTA have been deadlocked since 2013. This is not only due to disagreements on certain fronts, but also due to concerns raised by civil society. Ordinary citizens were particularly worried about the ‘WTO-plus’ demands, for example, those requiring patenting of seeds restricting farmers’ freedoms or those threaten production of cheaper generic medicines affecting patient groups.
The 13th Summit was held in Brussels in March 2016, with Prime Minister Narendra Modi visiting Belgium. Since then EU and India have only hinted at re-engaging for the proposed FTA. Though this was welcomed by the delegations in the joint statement of 30 March 2016, which emerged from the Summit, but fortunately the Government of India has not given into the pressures from EU and other business interests.
In EU, the European Commission undertakes all trade negotiations for FTAs. The Commission functions as the cabinet – the executive arm of EU. The President of the EC, Mr Jean-Claude Juncker was himself here to attend the Summit as head of the visiting delegation. His eagerness for an FTA with India was widely reported by the media and the kind of partnership he envisions with India figured in his personal tweets. He also came backed with a resolution passed in the EU Parliament on 13 September 2017 days before the EU-India Summit. The said resolution mandates the EC to negotiate an FTA with India.
Within India, the Ministry of Commerce and Industry engages in FTA negotiations on behalf of the Government of India. Yet there is no clear-cut policy on FTAs in general. Nor is there an institutionalised system of public consultation for FTA negotiations. The matter has also not been discussed in the Parliament of India. But an FTA has to be ratified by the European Parliament. And it cannot be fully implemented unless parliaments in the member states ratify the same in accordance with their national Constitutions.
Multilateralism and bilateral approaches
The Joint Action Plan (2016) commits the two sides to multilateralism. It specifically commits them to strengthen the multilateral trading system – World Trade Organisation (WTO). But there was no concrete outcome on how the two would approach the upcoming conferences of the WTO – the mini-ministerial in October and the ministerial conference (MC11) in December this year.
The EU-India ‘strategic partnership’ predates the WTO. But EU and India do not find themselves on the same side on several WTO issues, given long-standing sensitivities on agricultural subsidies and intellectual property. In fact, EU is currently revamping its anti-dumping and anti-subsidy legislation, to prepare itself from any possible economic impacts from imports. The legislation is expected to enter into force before the end of 2017.
In the area of agricultural trade, there is reciprocal interest to get access to markets to be able to sell agricultural products. But technical barriers to trade (TBTs) imposed by EU remain a problem for Indian exporters of food and farm products. With EU’s ‘WTO-plus’ expectations from a new FTA, things will not get any easier for the Indian side.
Notably, the proposed BTIA is not only about trade, but about investment also. An important component of the EU-India joint statement of October 2017 is the establishment of an Investment Facilitation Mechanism (IFM) for EU investments in India. It seeks to improve the business climate with the hope that the IFM will ease sharing of best practices and innovative technology from the EU to India. Leaders acknowledged that the “Make in India” initiative might offer investment opportunities for companies based in the EU Member States. India opposes any facilitation mechanism with respect to foreign investors at the WTO but with EU it appears to have readily accepted it. The establishment of such an IFM with one trading bloc may have several implications in the future, including India having to dilute its opposition against a multilateral mechanism on investment facilitation at the WTO. Once the country accepts it bilaterally, it will be difficult to oppose it at a multilateral forum.
History and Futures
There is a history to India’s relations with EU. The 28-member economic bloc formally came into being in 1993 with the Maastricht Treaty coming into force.
Soon after in 1994 through a cooperation agreement EU and India agreed to go beyond simply a trade and economic partnership. This history must be resituated in the present times.
Though trade is an important dimension of the partnership in the recent Summit, it neither came across as being the dominant concern nor were there any concrete next steps for the BTIA. The terms of engagement are being re-framed. Nevertheless, the so-called ‘strategic partnership’ has coverage of subjects much broader than trade and investment. Therefore, the future course of action warrants deeper thought and wider consultations.
Shalini Bhutani is a legal researcher and policy analyst based in Delhi.
Image Courtesy of Press Trust of India