EU and India agree trade reboot to confront China threats

European Commission President Ursula von der Leyen, centre, and Portugal's Prime Minister Antonio Costa leave at the conclusion of an EU summit at the Crystal Palace in Porto, Portugal, May 8, 2021. - AP

BRUSSELS (Bloomberg): 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 agreement was struck at a virtual summit between EU leaders and Indian Prime Minister Narendra Modi on Saturday, aimed at rebooting relations and boosting cooperation across key fields including digitalization, health and climate change.

"Europe and India are the two largest democracies in the world and our joint strategy is vital,” Portuguese Prime Minister Antonio Costa, who holds the EU’s rotating presidency, said after the summit.

"Working together we can resolve many global challenges: Covid today and also fighting climate change.”

"We’ve not only agreed to relaunch these negotiations, we are also going to embark on strategic cooperation on connectivity, digital and transport, ” Costa said.

"These agreements are vital to relaunch the global economy, the Indian economy, our economy.”

The EU’s push to deepen its ties with India 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 (US$117 billion) of trade in goods and services in 2020,11% of India’s total, just behind China and the US, 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 as they look to rebuild after the devastating blow dealt by the pandemic.

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 push for a deal with Europe comes just a few days after India and the UK 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 agreed to establish a framework to cooperate on tackling the pandemic and on ensuring access to Covid-19 vaccines, diagnostics and treatments.

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