EU and India agree trade reboot to confront threats from China

The European Union and India agreed to resume long-stalled talks on a free trade deal in an effort to strengthen their economic cooperation in the face of an increasingly assertive China.

The deal was struck at a virtual summit between EU leaders and Indian Prime Minister Narendra Modi on Saturday and aims to reboot relations and boost cooperation across key fields including digitalization, health and climate change.

“We have today agreed on concrete steps to expand this strategic partnership,” EU Council President Charles Michel said after the summit. “We agreed to launch negotiations on mutually reinforcing agreements on trade, investment protection and geographical indications.”

The EU’s push to deepen its ties with the world’s largest democracy as well as other Asian nations comes as tensions with China grow and sanctions against European officials call into question the bloc’s recent investment pact with Beijing. The EU accounted for 96 billion euros ($117 billion) of trade in goods and services in 2020, 11% of India’s total, just behind China and the U.S., according to the European Commission.

Trade talks between the EU and India were suspended in 2013 amid persistent differences over issues like cutting tariffs, intellectual property and the rights of Indian professionals working in Europe. A deal could be a boon for the two economies, especially as they look to rebuild after the devastating blow dealt by the pandemic.

Covid, Climate Cooperation

Alongside the trade talks, the sides also agreed to launch negotiations on two separate agreements on investment protection and on geographic indications—those that protect products like Champagne or Parma ham that have a specific place of origin.

Still, EU officials warn that even though there’s willingness to re-engage in trade negotiations, progress is still scant on a lot of key areas including Indian tariffs for goods—especially cars—and intellectual property rights.

The deal with Europe comes just a few days after India and the U.K. pledged a “quantum leap” in their relationship and said they aim to double their trade by 2030. While the announcement is part of Britain’s efforts to strengthen diplomatic and economic alliances after leaving the EU, talks with New Delhi on a formal free-trade agreement are not expected to start until the fall.

The talks with Europe come a difficult time for India, which is currently engulfed in a devastating wave of Covid-19 infections that could see it suffer the world’s biggest death toll from the pandemic. The two sides will seek to establish a framework to cooperate on tackling the pandemic and on ensuring access to Covid-19 vaccines, diagnostics and treatments.

Still, the timing of the discussion is somewhat awkward for the EU, which has voiced skepticism but no unified response to a U.S. proposal to suspend intellectual property rights for coronavirus vaccines—a proposal originally supported by countries including India.

Growing European opposition to the U.S. stance is stirring debate about the wisdom of waiving vaccine patents, which would require a lengthy process at the World Trade Organization. It’s also exposing long-simmering tensions over U.S. vaccine nationalism, which has left the EU and others to carry the weight of meeting global demand.