TRADE AND INVESTMENT AGREEMENT

Nations under the European Union consider India as one of the important trade partners which in 2015-16 contributes 13.5% of the total trade amount for the EU. In June 2017, India and the EU started negotiation on this in Belgium. This negotiation had taken place as a political commitment made by the leaders in the 7th India-EU summit held in Helsinki in 2006. This negotiation includes many aspects such as reduction in tariff rate access to both the European and Indian markets and investment opportunities. Recently, the exit of Britain from the EU and the cancellation of many investment treaties operating internationally directly impacted the BTIA.

India-EU broad-based trade and investment agreement

It is an agreement started in 2017 between India and the EU to come into cooperation to trade in goods, services and investment. It stalled in 2013 after the issues faced in market access and the movement of professionals. After Brexit, it has been assumed that this negotiation will further be consolidated and formalisation will take place as the UK was one of the major opposition to this agreement. The UK says that the liberalisation of visa rules in this agreement can deteriorate the employment opportunity for the citizens of the EU. More Indians could get a chance to work in the EU nations endangering the livelihood of the European citizens.

Mandate of BTIA

The negotiations cover 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. 

There are various mandates of BTIA such as connectivity, components, involvement of regional and multi-stakeholders, countering the BRI initiative of China and so on. From the connectivity perspective, it has more than physical connectivity which includes digital connectivity, energy connectivity, transport and most importantly people-to-people connectivity. The mandate of the component has three major aspects such as trade and investment, SDGs and science and technology. Exchange of scientific knowledge, new technologies from the European Union and supplying scientifically empowered and skilled manpower to the EU by India has twin utilities for the overall betterment of both parties. This will help in achieving the Sustainable Development Goals of both parties. Mandates of engaging multi or regional stakeholders have focused on connectivity within the country, Europe and other south Asian countries. This will allow both private and public investment in connectivity projects. This mandates countering the Belt and Road Initiative of China by aligning partnerships for development and democracy. This is also because, unlike BRI, BTIA stressed the principles of democracy, rule of law by avoiding the debt trap and increasing inclusiveness and transparency. In this way, India can make way forwards for the European countries to engage in the Indo-pacific region and can make a more robust geo-economical cluster for both countries. This can help in mobilising more economic resources for creating a platform for sustainable development for both parties. The regional infrastructure of both can be improved with investment from both regions. Though this negotiation has been in the bargain since 2007 but creates better economic prospects for both parties and they also know that. Therefore, both the negotiating parties should engage in the formalisation of this agreement. India can be benefited in the following ways. India is one of the major trade partners, engaging with the EU will only increase the benefits for India outweigh the risk factors. Both parties have huge population-based and robust markets. Therefore, the scale of business of private players of both countries will increase.

Challenges of BTIA

There are multiple challenges of this agreement faced by both parties. Self-reliance initiatives of India called Atmanirbhar Bharat Mission are considered by the EU as the protectionist approach of India. This creates a trust issue of the EU for the trade policies of India. On the other hand, more emphasis on the environmental aspects of the EU can make difficulties for India’s objective to meet the sustainable standard of labour and environment. After the Regional Comprehensive Economic Partnership with ASEAN countries and the refusal of India to join this trade block, India sends signals that it has consolidated interests in the European markets. On the other hand, diversifying the value chain objective of the EU away from China sends signals to India that it also has trade interest with India. Therefore, the only challenge to India and the EU to come into an agreement is the stubborn protectionism of the UK. This is assumed to be solved once the official exit of Britain from the EU has taken place. Apart from that, the internal security arrangement of India by abrogating Article 370 has been criticised by the EU made a negative impact on the ongoing trade negotiation between India and the EU. The cancellation of 25 bilateral investment agreements with 25 EU members states also has negative implications on BTIA. Therefore, it can be said that the multilateral trade relation of India with EU nations has positive implications for all the EU nations and India. Many challenges on this may be mitigated by abstaining from interfering with the internal matters of each other’s security policies. 

Conclusion

BTIA as the trade arrangement can be proven economic betterment for all the countries engaged. Its inception and formal negotiation process started in 2007 but still, no formal agreements have been coming into existence due to various issues. Criticism of the UK, interference of each others’  internal matter, the countervailing approach of not allowing other parties to engage with other parties which do not have good trade and political relation with them has restricted the further development of the negotiation process. Albeit, this trade agreement has various positive aspects of connectivity, countering BRI and excess the large population and market for each other’s goods, services and investments.