Thanks to Trump’s tattles, India hitches its wagon to the EU free-trade deal

​With Trump playing bull in a China shop to world trade, nations of the world are scampering to get bilateral free trade agreements (FTA) in place. India, which was already on this path since opting out of the China-led RCEP trade bloc just before Covid but was, as usual, trundling along in typical Indian bureaucratic fashion has suddenly been jolted into quickening its pace.

 

The first reason, like with most other nations, is the upsetting of the apple cart of globalised trade, earlier with how the Covid-19 pandemic turned the global supply chain topsy-turvy, and then with Trump’s slapping of supposed reciprocal tariffs on most of its trading partners, India included. 

 

Having sewn up deals with Australia and the UAE in recent years, it quickened India’s FTA deal with the United Kingdom last fortnight, which was otherwise running delayed by years.

 

However, that obviously would not have sufficed, for India had always thought that the US would be the ace up its sleeve. While the slapping of tariff up to 26 per cent did confuse New Delhi, it still had pinned its hope on two things—one, that a quick deal will be worked out with India’s ‘fraand’ Trump, and second, there was a great opportunity that India could take advantage of with China being slapped with way higher tariffs, by attracting global manufacturers to India instead.

 

Both game plans seem to have ended up as dreams getting a hard knock of reality. While China was quick to reach an initial deal with the US thus bringing down India’s hopes of taking advantage of the differential in tariff rates, Trump seemed to be in no hurry to seal a deal with India. 

 

In fact, by all indications, he dangled the threat of ‘deal or no deal’ in front of India to make it agree to a ceasefire over the recent conflict with Pakistan, and since then has been making several statements, including one about why Apple should move out of making iPhones in India.

 

Talks with the US for the proposed Bilateral Trade Agreement have been inching along, with commerce minister Piyush Goyal himself flying to D.C. to attend the negotiations, which analysts have billed as anything from ‘showing intent from the highest levels of government’ to even ‘India’s desperation’, depending on who you talk to.

 

That is exactly where the proposed free trade agreement with the European Union (EU) comes in, perhaps as a nice counterbalance to whatever is happening on the US front. Or, worst case scenario, nothing happens on the US front.

 

For one, the EU is India’s biggest trading partner for goods (the US leads when you put in Services exports as well) and while the FTA negotiations have also been meandering along without much headway for nearly two decades, the new global order has catalysed an added urgency to both parties.

 

There have been high-level visits in recent months, with the European Commission president Ursula Von der Leyen herself visiting PM Modi back in February. That managed to get the talks back on track again, with multiple rounds happening, the last one happening last week. 

 

In fact, India is not wasting any more time, with chief negotiator L. Satya Srinivas set to land in Brussels later on Wednesday to take the momentum further. It comes pretty soon after Goyal himself did a European whirlwind, where he met his counterpart Maros Sefcovic, the European Commissioner for Trade.

 

India is aiming for not just an FTA with the 27-nation trade bloc, but also a bilateral investment protection agreement, as well as recognition of geographical indications (GIs). But there are areas of concern that need to be sorted. 

Business