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India and EU relaunch FTA talks


India and the European Union agreed to relaunch free trade negotiations by resuming talks that were suspended in 2013 for the Bilateral Trade and Investment Agreement (BTIA).


GS-II: International Relations (Foreign Policies and development affecting India’s Interests)

Dimensions of the Article:

  1. European Union (EU)
  2. About the recent developments in India and EU talks
  3. Reasons of growing relationship between India and EU

European Union (EU)

  • The European Union (EU) is a political and economic union of 27 member states that are located primarily in Europe.
  • The EU has developed an internal single market through a standardized system of laws that apply in all member states in those matters, and only those matters, where members have agreed to act as one.
  • EU policies aim to
    1. Ensure the free movement of people, goods, services and capital within the internal market;
    2. Enact legislation in justice and home affairs;
    3. Maintain common policies on trade, agriculture, fisheries and regional development.
  • A monetary union was established in 1999, coming into full force in 2002, and is composed of 19 EU member states which use the euro currency.

In January 2020, the United Kingdom became the first member state ever to leave the EU. Note: United Kingdom is not a part of the EU now.

About the recent developments in India and EU talks

  • The EU-India leaders meeting also discussed Covid recovery plans and vaccine cooperation, adopted a Connectivity Partnership document outlining plans to cooperate on digital and infrastructure projects, and signed the contract for the second tranche of $150 million from the EU for the Pune Metro rail project.
  • However, India failed to secure the support of the European leaders for its proposal at the World Trade Organisation at the meeting for patent waivers for Covid vaccine, and government officials they hoped to see the EU continue to debate the issue.
  • The US had recently changed its stand and now supports the idea of waiving intellectual property rights on vaccines for the duration of the pandemic, and India would therefore watch the “evolving EU position on this”. The support of a major bloc like the EU is crucial to passing the resolution at the WTO by consensus.
  • The joint statement issued after the meeting said that India and the EU agreed to work towards a “balanced, ambitious, comprehensive and mutually beneficial trade agreement which would respond to the current challenges,” as well as launch negotiations for a “stand-alone” investment protection agreement and a separate agreement on “geographical indications” pertaining to intellectual property rights.
  • The India-EU connectivity partnership signed committed the two sides to working together on digital, energy, transport, people to people connectivity that was “transparent, viable, inclusive, sustainable, comprehensive, with a rules-based approach”. The partnership is seen as a response to China’s Belt and Road Initiative, and comes as the EU’s negotiations with China on their Comprehensive Agreement on Investment (CAI) have run into trouble. 

Reasons of growing relationship between India and EU

  • Changing Geopolitical developments: As highlighted by EU strategy on India, released in 2018, EU sees EU-India relations in the context of broader geopolitical developments, primarily the rise of China. Impact of China in Europe and Asia (e.g. Belt and Road initiative) has pushed EU to change the nature of its partnerships in the region, particularly with India.
  • Convergence of interests in the Indian Ocean as the Indian Ocean is the main conduit for global trade and energy flows. India, EU see each other as partners in securing the Indian Ocean by strengthening institutions, rule of law, and a regional security architecture.
  • Retreat of the U.S. from global leadership and uncertainty of US policy under Trump has provided opportunities for EU- India cooperation and trilateral dialogues with countries in the Middle Fast, Central Asia and Africa.
  • Strategic rivalry between the US and China: Both EU and India have a common interest in avoiding a bipolarized world and sustaining a rules-based multilateral trading system with the United Nations and the World Trade Organization at its core.
  • Green governance: After the US exit from the Paris climate agreement, India and the EU stand to gain from a joint leadership on global governance matters such as climate change, clean energy or circular economy.
  • New emerging world order after COVID-19: As EU seeks to move away from a global supply chain that is overly dependent on China, India can emerge as its most natural ally.

-Source: The Hindu

February 2024