The European Union: What next?
To say that the year 2016 shook up the very foundations of the European Union (EU) would not be an exaggeration. The reverberations from the Brexit vote in Britain aside, the economic bloc is undergoing its biggest existential crises that will continue to unravel in the New Year.
India has had a rather bumpy ride with the EU, not least when it comes to the now infamous free trade agreement (FTA) which has been stuck in various rounds of negotiations since 2007. However, the overall trade figures continue to look promising, with the EU still among India’s leading trading partners, way ahead of China and even the US, clocking $126 billion in bilateral trade.
At the Trade and Investment Partnership Summit (TIPS) 2016 organised by the Europe India Chamber of Commerce (EICC) in Brussels in November, Jolana Mungengová – member of the Cabinet of EU Trade Commissioner – sought to highlight the many positives of the relationship.
“The EU and India are long-lasting partners and the EU remains committed to a broad and ambitious FTA with India,” she stressed.
However, as Rajya Sabha MP Swapan Dasgupta pointed out, no such agreement can be achieved unless there is a clear understanding in the EU of India’s domestic needs.
“It is important to note that every FTA also has to address a domestic political constituency… there must be a happy meeting point,” he said.
And as India Inc. CEO Manoj Ladwa highlighted in the lead up to the summit, there is considerable scope for greater levels of engagement but for this to become reality, several wrinkles have to be ironed out. For instance, not being more flexible on allowing Indian professionals easier access to the EU job market is likely to prove a stumbling block in any future negotiations.
“India is one of the fastest growing world economies yet for the EU it’s well behind the US, China, Switzerland, Russia, Turkey or Japan,” points out Luisa Santos, Director for International Relations at BusinessEurope.
While the EU may have some genuine concerns about the complexity of doing business with India, it is time to take note that some of those views may need updating following sweeping reforms under the Narendra Modi led government.
It is equally important to analyse why India still seems more inclined to strike bilateral agreements with member countries rather than dealing with the EU as whole.
During these times of Brexit and global economic uncertainty, a more ambitious approach on both sides should define the coming year.
As leading Indian entrepreneur Shishir Bajoria questions: “Despite the unending FTA negotiations between EU and India, trade has grown both ways. It makes me wonder if we do in fact even need an FTA?”
Arnaldo Abruzzini, CEO of Brussels-based trade group Eurochambres, echoes these views: “Are we sure that the traditional trade agreement is the best way to invest our resources today? We should be pushing for a new dimension of international trade relationship, one that involves economic diplomacy – a different way to achieve the same results as trade negotiations.”
Indeed, it may be time to explore deals outside traditional trading frameworks and boundaries. After all, the year 2016 has been anything but one that has followed set patterns and trends in global geo-politics.