Talking trade with the EU:
Context: As the economy begins to suffer from the U.S.-China trade war, it is imperative for India to pursue a free trade agreement (FTA) with the European Union (EU).
Why it is important for India to hasten talks with the EU on a free trade agreement?
- India risks being left behind amidst a collapsing global trade architecture, rising protectionism and a new emphasis on bilateral FTAs.
- India is the only major power lacking an FTA with any of its top trade partners, including the EU, the U.S., China and Gulf economies. This situation is not tenable as most trade is now driven either by FTAs or global value chains. The EU’s revived focus on FTAs could only exacerbate this risk for India.
- Stuck in a ‘grey zone’, without preferential FTA tariffs or GSP+ status, India will struggle to keep exports competitive for Europe, its largest trade partner where 20% of its exports land up.
- The collapse of the Transatlantic Trade and Investment Partnership and concerns about excessive economic reliance on China have propelled the EU to become a little more pragmatic, which New Delhi should leverage before it’s too late.
- The EU also offers India a unique regulatory model that balances growth, privacy and standards. India’s governance framework shares the European norms of democratic transparency and multi-stakeholder participation on a variety of new technological domains, from regulating artificial intelligence to 5G networks.
- New Delhi must see this as a strategic premium that is not accounted for in a strict cost-benefit economic analysis.
What needs to be done?
- Beyond mere economic cost-benefit analysis, India must also approach an EU FTA from a geo-strategic perspective. New Delhi must realise the long-term strategic benefits of a trade deal with Europe.
- When New Delhi speaks of Europe as a strategic partner to uphold a multipolar order, it must go beyond security and begin with the business of trade and technology.
Sources: the Hindu.