After years of discussions and a break of several years, the European Union and India want to complete a free trade agreement this year.
It would be “the largest of this kind in the world,” said EU Commission President Ursula von der Leyen in the Indian capital of Neu-Delhi. “I am aware that it won’t be easy.” However, both sides wanted to work for it to work this year. The Leyen unity with the Indian Prime Minister Narendra Modi.
Customs reduces through a free trade pact, uniform rules are determined and the supply chains are also simplified. There was negotiations on an agreement between the EU and the fifth largest economy from 2007 to 2013. At that time, however, the talks failed and were only resumed three years ago. The EU’s intention to speed up the trade talks is also seen in connection with the threats of the US government to raise new import duties on goods from the EU.
Negotiating hurdles
From the perspective of the Europeans: India’s perspective on the inside are considered negotiating hurdles. According to reports of Indian media, the government in New Delhi is again concerned with the potential effects of the so-called CO2 border compensation system (CBAM). The system provides for a carbon price for importing certain goods made outside of the EU.
Before her meeting with Modi, the Leyen dealt with the free trade talks in a speech during a discussion event. After their conversation with the Prime Minister, both emphasized that they instructed their respective negotiation teams to conclude the agreement before the end of the year.
Positive reactions came from Germany. “Finally there has been movement in the negotiations for an EU-India free trade agreement,” said the President of the Association of the Automotive Industry (VDA), Hildegard Müller. For companies in German industry, India is offering great potential as the third largest car market market in the world.
Future security partnership
In view of the geopolitical challenges, the EU and India also want to move closer together in the security area. From the Leyen in Neu-Delhi announced that both sides checked a “future security and defense partnership” according to the model of EU partnerships with Japan and South Korea. The cooperation could be strengthened, for example, in joint threats from cross-border terrorism, cyber attacks and “the new phenomenon of attacks on our critical infrastructure”.
During her visit in India, the Germans were accompanied by commissioners of the 27 EU countries. It was the first trip of the entire college abroad after the new Commission started its work in December.
EU largest trading partner for India
The visit should strengthen the strategic partnership between both sides. The EU is the largest trading partner for India. The bilateral trade achieved 120 billion euros in value last year. Both sides are currently preparing a new strategic timetable for their relationships, which is to be presented at a planned bilateral summit this year.