DESPITE earlier hopes, a ground-breaking EU-India free-trade agreement (FTA) was not signed at the recent 12th EU-India summit in Delhi.
But the buzz generated by the negotiations as they enter a critical final stage is helping to lift Europe’s profile in a country which has so far kept the EU at a polite arm’s length.
Significantly the trade talks, now into their fifth year, have helped to focus official and public attention in India on the EU — rather than individual European member states — as a global economic player. The challenge facing European policymakers is to use the shift from indifference to interest in EU-India relations to reinforce the still largely underdeveloped conversation with Delhi on non-trade questions.
The change of mood is recent but palpable on both sides. Senior Indian officials now describe the EU as a “key strategic partner”. Catherine Ashton, the EU high representative for foreign and security policy was recently in Delhi for a foreign policy dialogue with her Indian counterpart.
With EU-India trade currently estimated at a mere 86 billion euros a year (compared to almost 400 billion euros annually with China), the free-trade pact under negotiation — officially called a Bilateral Investment and Trade Agreement — is a good step forward in building stronger ties and increasing mutual understanding.
The ongoing trade negotiations, while problematic on some key issues, have meant more regular contacts between Indian and European officials — and a clearer European understanding of the complexities of India. This is cause for some celebration. For all the talk of India’s rise and the country’s growing global clout as a member of the G20, the EU has not devoted adequate time or effort to clarify its strategic objectives and interests in the country. As such the EU-India ‘strategic partnership’, launched in 2004, has remained under-exploited.
In part, this is the result of India’s complex landscape. According to some forecasts, the country is set to overtake China as the world’s fastest-growing economy by 2050. But India also has one third of the world’s poor. A major effort is therefore necessary if India is to meet the Millennium Development Goals (MDGs).
As Nobel laureate Amartya Sen points out, “India has started falling behind every other South Asian country (with the partial exception of Pakistan) in terms of social indicators, even as it is doing so well in terms of per capita income.”
India and Europe share common values such as democracy and a preference for multilateralism. They also have common goals as regards good governance, achieving MDGs and working for global peace and stability. But the partnership is made more difficult because of divergent interests. Crucially, there are different interpretations of what a strategic partnership is supposed to achieve.
The EU sees it as a partnership to achieve global public goods by meeting 21st-century challenges, including terrorism, proliferation of weapons of mass destruction, state failure and regional conflicts. India views its strategic partnerships with the EU and the US as a vehicle for ensuring greater worldwide prestige and political clout. There is also an inevitable dissonance between the EU as a status-quo power which is often reluctant to make room for newcomers and India which is seeking great power status. The accusation is that the EU speaks the language of inclusiveness but is unwilling to cede its seats and voting rights.
This time, however, Europeans want to do more than talk trade with India. While in Delhi, European Council President Herman Van Rompuy and European Commission President José Manuel Barroso will try and convince their host Indian Prime Minister Manmohan Singh to join the international sanctions regime against Iran.
The EU says it is disappointed that India has not joined the large international consensus against Iran’s nuclear programme. India, however, is heavily dependent on Iranian oil to meet its growing energy needs. Venturing into relatively new political territory as regards volatile politics in South Asia, Messrs Rompuy and Barroso will also encourage recent signs of a thaw in Indian relations with Pakistan following Islamabad’s decision to grant Most Favoured Nation trade status to India and Delhi’s move to allow a World Trade Organisation waiver on zero-tariff EU imports of Pakistani textiles.
There will be discussions on climate change and signature of a declaration on enhanced cooperation on energy which will allow joint activities in areas such clean coal, energy efficiency and renewables as well as nuclear safety. Interestingly, cooperation possibilities will be explored as regards cyber security and anti-piracy operations as well as more exchanges on counter-terrorism.
These initiatives are positive and should help prepare the ground for further political exchanges. However, as the FTA negotiations enter the final stretch and domestic lobbies in both India and Europe fight hard to defend their interests, the focus is on trade. The EU is seeking a steep reduction in tariffs for export of its automobiles, wines and spirits to India. However, the proposals have met with fierce resistance from Indian manufacturers.