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1st India-EU High-Level Dialogue on Trade and Investment held

Posted on February 8, 2021 by admin1  291

In News: The First High-Level Dialogue (HLD) as agreed under 15th India-EU Leaders Summit, 2020 was held on 5th Jan 2021.

Key Outcomes:

  • Both emphasised the need to deepen global cooperation and solidarity via regular engagement in the Post COVID era.
  • Next meeting in 3 months with the aim to arrive at a consensus on different bilateral trade and investment relations viz. bilateral Regulatory Dialogue; an India-EU Multilateral Dialogue.
  • Both decided to reinvigorate the renewed India-EU commercial and Economic Partnership to achieve full potential.

Challenges Ahead:

For a successful India-EU trade pact both need to be harmonious, strong and stable but the situation seems a bit different. Few challenges are as listed below:

  • Reasons behind the failure of the previous Comprehensive Free Trade Agreement, 2007 are still the same. The mutual differences are over issues like
    • The movement of professionals, labour, human rights and environmental issues
    • India’s high tariffs, inconsistent tax regime and non-payment of arbitral awards.
  • Brexit: Before Brexit, the EU had GDP equal to the USA and was one of the major trade partners of India. Now, the EU is relatively weak.
  • Further 3 major challenges which may weaken the EU and in turn hamper prospects of India-EU Deal are as follows
    • Turbulent situation in the European Union:
      • Internal Discord: After a long negotiation, the EU was able to take Hungary and Poland onboard for COVID-19 recovery package of USD 2 trillion.
      • Euroscepticism: Many countries have soon coming elections and eurozone and migration crises and implementing COVID-19 lockdowns may be a major issue raised. It will further destabilise the unity of the EU.
      • Further, sentiments against Islam and anti-secular migrants may create trouble.
      • No agreement over Security and Defence: France wants more autonomy while Germany, Netherlands and Portugal want to rely on NATO.
    • International Scenario: The key driver over here was Trump’s Policies.
      • It forced the EU to relook into its self reliance in Defence, Economy, Security and Supply chains.
      • Turkey, China, Russia and Iran have flouted different Treaty Rules due to Trump’s Foreign Policies.
    • COVID-19 crisis
      • Netherlands saw riots first time in the last 40 years
      • Divisive Vaccine Nationalism and few initial restrictions by Germany and France on the export of PPE kits has created a mutual distrust.
      • Anticipated 60% shortfall in vaccine procurement is challenging an already turbulent EU.

Way Forward:

As said by John Adams, “every problem is an opportunity in disguise”, India should climb up the scenario in pursuit to strengthen and maintain Europe’s unity and integrity.

  • India can help the EU by sending its own Indigenous Vaccines.
  • India should also seek technology transfer and deeper defence and economic tie-ups with Europe to diversify the supply chain of the EU.
  • India can also pose as a soft power with the example of Unity in Diversity.

India can be a great player in ensuring the EU’s solidarity and hence the trade deal will be mutually beneficial and should be forwarded with enormous political will and adroit skill.

Background: India EU Relations

  • India-EU bilateral relations date back to the early 1960s with India being amongst the first countries to establish diplomatic relations with the European Economic Community in 1962.
  • EU-India Cooperation Agreement 1994 provides the legal framework for EU-India relations. India and the EU have been strategic partners since 2004.
  • Since the Lisbon summit in 2000, India has belonged to a small group of countries including the US, China, Russia, Japan and Canada among others with whom the EU holds regular summits.
  • The relationship was upgraded to a ‘Strategic Partnership’ during the 5th India-EU Summit held in 2004 in The Hague.
  • The 14th India-EU Summit was held on 6 October 2017 in New Delhi.

Trade & Investment–

  • EU is India’s largest trading partner, accounting for 11.1% of total Indian trade, on par with the USA and ahead of China (10.7%) in 2019 where as India is EU’s 10th largest trading partner
  • EU is the second-largest destination for Indian exports (over 14% of the total) after the USA
  • Trade in goods between the EU and India increased by 72% in the last decade.
  • Nearly 6,000 European companies are present in India, providing directly 1.7 million jobs and indirectly 5 million jobs in a broad range of sectors.

Fig: India-EU Trade at a glance (Source: European Union)

Deadlock in Broad-based Trade and Investment Agreement (BTIA):

  • The negotiations on this agreement were started in 2007 in Brussels, Belgium.
  • It covered
    • Trade in Goods,
    • Trade in Services, Investment, Sanitary and Phytosanitary Measures,
    • Technical Barriers to Trade, Trade Remedies,
    • Rules of Origin, Customs and Trade Facilitation, Competition, Trade Defence,
    • Government Procurement,
    • Dispute Settlement,
    • Intellectual Property Rights & Geographical Indications,
    • Sustainable Development
  • The problems crept in over the issues like
    • The EU wanted to include the environment, labour, and government procurement in the talks.
    • Data secure status and Easy Visa policy were major demands by India

Sectoral Cooperation–

  • Infrastructure
    • European Investment Bank (EIB) opened its first office for the South Asian region in 2017, headquartered in New Delhi.
    • The EIB has extended loans for the Lucknow Metro Project and the Bangalore Metro Phase II Project
  • Energy
    • Joint Working Groups have been constituted under the India-EU Energy Panel to deal with Coal, Clean Coal Technology, Energy Efficiency/ Renewable Energy.
  • Environment
    • India-EU Joint Working Group on Environment: Deals with prevention of pollution, waste minimisation, protection of Biological diversity, sustainable forest management, environmental education etc.
      • Joint Working Group’s Meeting held in New Delhi in 2017 created India- EU Environment Forum.
    •  EU Commissioner for Environment, Maritime Affairs and Fisheries led a Circular Economy Mission to India in 2018.
      • Its aim was deepening cooperation in policy formulation and fostering business opportunities
  • Different Joint Working Groups on Water; Pharmaceuticals, Biotechnology & Medical Devices; Agriculture and Marine and a dialogue on Information and Communication Technologies (ICT) were also set up to deepen cooperation in respective fields.
  • Horizontal Agreement on Civil Aviation between India and the EU, which was signed in 2008 became operational in February 2018.

Source: TH

 

 
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