New Delhi, March 4 – The successful conclusion of negotiations on the EU-India Free Trade Agreement (FTA) comes against the backdrop of a dramatic shift in the global strategic environment, which has led to increased efforts by both sides to recalibrate their bilateral economic partnership, according to an article published by the European Policy Centre (EPC).
"The EU has recently made unprecedented efforts to diversify its trade partnerships. Policymakers in Brussels have become increasingly wary of China's state-led economic practices while simultaneously grappling with a more aggressive and unpredictable shift in US trade policy. This, along with the wider fragmentation of global economic governance, has reinforced the EU's determination to reduce strategic dependencies and broaden its network of economic partners," the article by Almut Maller and Ivano di Carlo stated.
Amid Russia's invasion of Ukraine and an increasingly assertive pursuit of national interests by Washington and Beijing, the EU is concerned about the future of open markets and the rules-based international order on which the bloc's prosperity depends. In this context, the new FTA with India represents an additional element of this diversification agenda, the article pointed out.
According to the article, the FTA also provides India with a "strategic hedge" against the economic pressure mounted by the Donald Trump administration over the country's imports of cheap oil from Russia.
The article highlights that political leaders of the EU and India chose to give their renewed trade commitment prominent public visibility, describing it as "the mother of all deals". The European leaders also attended India's high-profile Republic Day celebrations to emphasize this point.
"Beyond the positive impact that economists assess for trade between the EU and India under the agreement, both sides were keen to present their new alliance as a timely move by two of the world's largest democratic economies to re-strengthen credible and reliable trade frameworks, with the ambition of generating impact well beyond their bilateral relationship," the article stated.
For the EU, the political stakes are particularly high. Brussels must demonstrate the extent to which its new trade strategy can face the challenge posed by the US under the presidency of Donald Trump, the article added.
