EU and India Unlikely to Finalize Trade Agreement by End of Year
(Bloomberg) -- Trade negotiators from India and the European Union are no longer optimistic they can finalize a trade agreement by the end of the year, with talks stuck on a few key issues like steel and automobiles, according to people familiar with the matter.
Negotiations are now likely to stretch into next month, with both sides still hoping to clinch a deal that can be announced when European Commission President Ursula von der Leyen leads a delegation to New Delhi in January, said the people, who spoke on the condition of anonymity.
Prime Minister Narendra Modi and von der Leyen had set a deadline in February to conclude the FTA this year.
While both sides made another political push after the summer break to finalize the deal, technical issues remain. The final outcome will likely be an agreement that’s more limited in terms of its ambition compared with others concluded by the European bloc in recent years, the people said.
The sticking points appear to be around sensitive areas like automobiles and steel. The EU wants New Delhi to raise the quota of about 80,000 cars it could export to India under a reduced tariff, some of the people said. New Delhi, meanwhile, is seeking an easing of duties on some steel products exported to the EU and wants flexibility around the bloc’s rules on carbon taxes.
European Commission spokesperson Olof Gill recalled that EU trade chief Maros Sefcovic visited India early this month to advance negotiations, which was preceded by “intensive negotiations” at a technical level.
“Engagement will continue with a view to meeting the objective of finalizing the negotiations by the date of the upcoming EU-India Summit,” he added.
India’s Ministry of Commerce and Industry didn’t immediately respond to an email seeking further information.
The FTA has been under negotiation for nearly two decades, but talks were given a new urgency this year after President Donald Trump returned to the White House, hiking tariffs and upending global trade. Trump’s 50% tariff on Indian goods has pummeled the country’s export industries, forcing Modi’s government to seek alternative markets.
Commerce Minister Piyush Goyal said during a trip to Brussels in October that India and the EU have “significantly reduced” outstanding issues around the deal.
New Delhi has also fast-tracked talks on FTAs with several nations — including New Zealand, Chile, Peru and Oman — to make up for the loss of access to the US market. Modi is expected to visit Oman next week, while New Zealand’s trade minister is currently in India for the next round of talks. In July, New Delhi sealed an FTA with the UK, eliminating tariffs on products ranging from cars to alcohol.
Meanwhile, the EU is pushing to conclude trade deals and other types of partnerships around the world, including on digital, minerals and security, in an effort to diversify amid pressure from US and China, its largest trading partners. Still, the bloc is struggling to push over the line by the end of the year its landmark agreement with the Mercosur region — comprising Argentina, Brazil, Uruguay and Paraguay — its biggest trade deal ever negotiated after 25 years of talks.
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