The European Union is working hard to diversify its trade relations, as the speeches by European leaders in Davos and Brussels this week reminded us, in response to the unpredictability of relations with America, the historic ally (see EUROPE 13792/1).
Against this backdrop, the finalisation of negotiations on a free trade agreement with India on Tuesday 27 January is becoming more pressing.
The President of the European Commission, Ursula von der Leyen, and the President of the European Council, António Costa, will be in New Delhi on Monday 26 January to join in the celebrations marking the 77th anniversary of the Indian Republic, before taking part on Tuesday in a bilateral summit that has been anticipated for many months (see EUROPE 13782/4).
According to several sources, the partners are “well on the way” to finalising discussions on their free trade agreement - the shake-up in trade relations with the United States having prompted the EU and India to move forward with their bilateral negotiations.
“After Mercosur, this would be another major and highly strategic agreement. A free trade agreement between India and the EU would create one of the largest trade zones in the world, a market of around 2 billion people”, explained an EU source.
It also points out that India accounts for only around 2.5% of the EU’s total trade in goods, compared with nearly 15% for China.
India is not known as an “easy” negotiating partner, as it is highly protectionist on the trade front. As a result, the EU is unlikely to succeed in obtaining major concessions on tariff cuts for a wide range of agricultural products.
Another source of dissatisfaction for India is the EU’s border carbon tax (CBAM) on imports of steel, aluminium and cement.
However, the agreement should finally make it possible - if not to directly reduce customs duties on European cars and wine - at least to envisage gradual reductions or limited quotas.
The agreement should also open up the Indian market for electronics, textiles and chemicals.
Strategic agenda, connectivity and mobility. The partners will also be working on a new joint declaration - a ‘comprehensive EU-India strategic agenda’ - as a work plan for the next five years in areas such as energy, climate, connectivity, irregular migration, etc.
The EU hopes that the summit will also “give new impetus to the preparatory work” for the India-Middle East-Europe Economic Corridor, which would create new transport, digital and energy connections between India and Europe.
The EU and India are also expected to finalise a memorandum of understanding on legal migration, designed to facilitate the movement of skilled workers, students, researchers and seasonal workers to the EU (see EUROPE 13785/1). According to our information, after consulting the first version of the memorandum, the Member States insisted on the need to cooperate fully on the return and readmission of irregular migrants, but also to ensure that this cooperation was voluntary, without creating legal obligations.
In addition, within the EU-India Trade and Technology Council (TTC), the EU hopes to initiate “exploratory discussions” on India’s association with the Horizon Europe Research Framework Programme.
Defence and security. The EU and India are also seeking to conclude a security and defence partnership along the lines of those concluded with Japan and South Korea (see EUROPE 13792/6, 13517/10).
This partnership should focus on maritime security, cyber security, the fight against terrorism, as well as non-proliferation and disarmament, against a backdrop still marked by Russia’s war of aggression in Ukraine.
Ties between India and Russia remain an element of tension in the negotiations between the EU and New Delhi (see EUROPE 13711/2).
“Of course, we are aware of the historic relationship between India and Russia. In this context, it is therefore important to encourage India to use its influence to support peace efforts”, insisted a European official. (Original version in French by Pauline Denys with Justine Manaud)