When Economic Warfare and Weaponisation of Trade are in Vogue, What is the recourse for affected players? The commonsense strategy is to diversify and reduce overdependence on any one partner to offset vulnerabiits. Fresh Rounds of Proactive Economic Diplomacy Between the European Union (EU) and India for Speeding Up the Conclusion of the Long-delayed free trade Agreement (FTA) Can Be UNDERSTOTOD in this contest.
Given the market turmoil and unpredictable unleashed by the trade wars of the united states (us), brussels and new delhi are jogging with renewed determination to Deepen their Economic Integation for Stable, Stiady and Mutically Beneficial Gains. Studies estimate that eu-India Fta could raise India’s Gross Domestic Product (GDP) By 1.3% Annually while the eu will enjoy a booster a booster a booster a booster shot of 0.14% to it.
Freer Trade with the Eu Can Turbocharge India’s Economy to Gallop at Above 8% per per annum. Despite Conciliator Messaging from Us President Donald Trump Regarding An IMPEing Trade Deal To Settle The Row With India, In the Worst-Case Scenario of Maximal American Tariffs of 50% on 50% on India Remaining in Place And Shaving off 0.5% to 0.6% of India’s GDP, The Fta with the Eu Can Cushion The Blow.
Lately, rhetoric has been heard about russia and China being alternatives to the us for India. But the reality is that Neither of these two counts can absorb Indian expenses and Drive Indian’s Economic Growth the way the way the eu can. Russia and China Run Humongous Trade Surpluses With India Worth $ 59 Billion and $ 100 billion respectively. Even if Moscow and beijing open their markets with zero tariffs and non-Tariff Barriers to Indian Exports, The Prospect of these two nations compensating for the luck
The eu, on the other hand, is a legitimate claimant to being an equal of the us as a destination for Indian expenses. As of 2024, The EU’s 27 Countries Cumulatively Absorbed 17.4% of India’s Total Global Exports, Second Only to the US.
With a Market Consisting of 450 Million People, High Purchasing Power, and Advanced Technological and Financial Capability, The EU PRESENTS A Window of Opportunity for India to SECURE Its ETS EITS EITS EITS EITS EITS EITS EITS EITS EITS EITS EITS EITS EITS EITS EUTURE it. India’s other new ftas with Australia, the UAE, the UK, and the Four-Member European Free Trade Association (EFTA), are Alredy Reaping Dividends. Clinching the fta with the eu will be the crowning glory of a new era of economic openness and publicism in India’s Diplomy.
If one views the Scenario from Brussels, Although India Currently Accounts for Less Than 3% of the EU’s Total Trade in Goods, The Trend of Sluggish Economic In Europe and Fars of Fars of DECLIOPEANING Competitiveness Meaning that Unlocking a Vast New Market Such As India is an imperative for the eu to sustain its long-term Economic Vitality and Influence.
It is notworthy that the eu had to bow to American pressure and sign a trade deal with the trump administration The other Principal Trade Partner of the Eu, China, Has become so dominant in many industrys that the europeans are now recoiling from their owl “china shock” and are imposing tarfs to sterefs to stere State-Subsidized Chinese Exports. The Ongoing Tit-For-Tat Eu-China Trade War on Electric Vehicles and Meat Products Shows the Limits of the Limits of the old european reliance on the us and China as the Twin Pillar For Commerce.
In light of these developments, it is apt for the eu and india to inch closer to their landmark fta. Going forward, what will be required to bring the long-drawwn-out negotiations to a happy ending is flexibility to concede here and there for the salage of expanding the larger. India’s Concerns About Environmental Conditionalities Through the Eu’s Carbon Border Adjustment Mechanism (CBAM), Which Cold Cold Disrupt Indian Exports in Cement, Iron and Steel, Steel, Affement, Akel, aluminium, Electricity, and Hydrogen, Need to be Accommodated Creatively by the Eu.
The fact that the eu could concede to the us “to provide additional flexibilites in the CBAM implementation” in Order to Sustain the Overall Trans-Atlantic Alliance means the Eu COULD ALSO DEVISE SOME SOME SOME SOME SOME SOOLD ALESO Devise Some India. On the other hand, India could wear the pros and consider and consider the europeans halfway on Financial Services, Shipping, Wines and Spirits.
The eu and India are currently at a juncture where their respective strategic autonomies are at stake. Hence, they need to be bolder and prioritise long-term win-win cooperation over haggling cussedly about specific sector. India’s external affairs minister s jaishankar remarked recently while hosting the German Foreign Minister Johann Wadephul that “a Mulipolar World With Strategic Autonomy” and “Strogger cooopting among Key Member States ”is Necessary to Tackle the” Twin Challenges of Economic Volativity and Political Uncertainty. “
With bot the europeans and the Indians singing the same tune of strategic autonomy in the backdrop of trump’s topsy-Turvy assault on the economy Interests and Political SENSIBILITIES of Allies, Partners, Blatners, Blatners congruence is high and it should ultimately propel the Marathon Trade Negotiation to a Fruitful Closure. Any Possible American Pressure on the Europeans to Slap Secondary Sanctions on India Over Indian Purchases of Russian Oil Must Be Resisted by Brussels for its for Own Good.
If the eu-India fta crosses the finishing line, it will be not just a boon for businesses and workers on bot sides but also a concrete tests to the will in brussels and newly Delhi to Usaer World Demonstruating that they are two genuinely independent poles shaping a new international order.
Sreram chaulia is professor and dean of the jindal school of international affairs. The views expressed are personal
