The European Union and India are set to revive long-delayed talks on a comprehensive trade deal as the two seek to strengthen economic ties and respond effectively to the rise of China.
EU-India Summit 2020. Source: European Council
EU-India Summit 2020. Source: European Council
The talks have been suspended since 2013 following disputes over tariff rules for automotive components and the right to free movement for professionals.
The two sides have returned to the negotiating table at a time when the talks have become an ever-higher priority, and they attempt to deal with China and its model of one-party authoritarian capitalism as well as the continued economic chaos brought by the coronavirus pandemic.
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The resumption of talks was part of a discussion held on Monday between European Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi.
The resumption of talks will be officially announced - providing there are no last-minute hitches or resistance from EU member states - at the conclusion of an EU-India virtual summit in Porto, Portugal this weekend.
"There is optimism, but it is not a done deal," an Indian government official was quoted as saying in the FT.
As well as relaunching the trade talks, Brussels and New Delhi will also launch negotiations of a separate investment treaty and an agreement that will protect regional speciality foods, according to a senior commission official.
The two sides will also make improvements to the infrastructure connections.
"There is clear momentum to strengthen our strategic relations on trade, digital, climate change and multilateralism," Von der Leyen tweeted after Monday’s call. "I’m encouraged by the prospect of intensifying our trade and investment relations."
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The revival of negotiations comes at a time when the UK is also making a push to secure a deal of its own with India.
Despite intense work between 2007 and 2013, previous attempts by the two sides to come to an agreement floundered. On India's part, there was reluctance to ease access restrictions for EU lawyers as well as the further opening up of its markets to car parts from the bloc. Reports at the time also spoke of frustration in New Delhi at the EU's unwillingness to offer a more generous package of rights for the Indian professional service providers to work in Europe.
EU trade in goods with India, 2009-2019. Source: Eurostat
"It’s a difficult country to negotiate with because they are fairly protectionist," David O’Sullivan, a former director-general for trade at the European Commission was quoted as saying in the FT. "They tend not to do massive liberalising trade deals. If you look at any they have done, they are not what we would call deep and comprehensive."
He added that there would be a "strategic first-mover advantage" for the EU in securing a deal, saying: "We would be the first bloc to conclude a comprehensive FTA. That is a reason in itself to look at all the specific problems [in the talks] with a bit of context."
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There is a general feeling among officials on both sides that securing a deal now has a higher chance of success than it did a decade ago, with India looking for ways of responding to China's increasing economic dominance in the region.
Last year, New Delhi decided to withdraw from the Regional Comprehensive Economic Partnership, a bloc of 15 countries, including China and Japan, forming a regional economic partnership.
A senior commission official described that deal as a "game-changer", adding that the "geopolitics [are] shifting" and it had given the talks a "political impetus".
He added that the talks' progress was dependent on trust-building from New Delhi's side regarding market access, including the easing of movement rights for Europeans visiting Indian production plants and factories.
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