Changing agenda of EU-India trade relations

Written by Malcolm Subhan | Updated: Jan 21 2006, 07:27am hrs
Petroleum minister, Mani Shankar Aiyar, will feel very much at home in Brussels these days, as relations between India and the European Union (EU) are generating the kind of momentum he is familiar with since his days as a member of Indias diplomatic mission to the then nine-nation European Community.

Energy was not on the agenda then, but Mr Aiyar can now give necessary political support to the growing India-EU dialogue on how to provide for secure and sustainable supplies of oil and gas-at affordable prices. An India-EU energy panel has already been set up. A conference on energy is slated later this year.

Unlike his colleague at the petroleum ministry, commerce and industry minister, Kamal Nath,is dealing with issues that have dominated India-EU relations since the early 1960sto the point where the agenda of the high-level trade group that has been set up under the India-EU Action Plan has a weve been here before look about it.

The group is holding its first formal meeting in New Delhi on February 13 and 14. Like its predecessors, it will be looking at trade flows between India and the EU, identifying obstacles to further trade development, and drafting recommendations. The difference, and it is a very big one, is that the group will be making its recommendations to the India-EU political summit, which will be meeting in the Finnish capital, Helsinki, this October.

So far, so good. The work of the group may even result in an India-EU agreement on trade and investment. Which will be something of a comedown, given that India took the lead in drafting the first such agreement with the EC some 30 years ago! This was the India-EC trade cooperation agreement, which set the pattern for the first generation of trade agreements between the Europeans and Asian developing countries.

But it is a self-evident truth that it is traders, not government officials, who drive trade. Hence, the importance of the India-EU business summits. The EU wants the business summits changed to a Round Table of top Indian and European CEOs, which will focus on ways of promoting two-way investment during the Helsinki political summit. The end result could even be an India-EU investment agreement.

It is just as well that Indias trade with the 25 EU countries is booming, because Mr Naths energies seem to be devoted to ensuring that the Doha Development Round ends with an agreement that genuinely promotes development.

But Mr Naths efforts on behalf of developing countries, most notably through the G-20 group of countries led by India and Brazil, have put him on a collision course with the EUs chief trade negotiator, Peter Mandelson. EU officials here claim that Mr Nath is pressing the Europeans for substantial concessions, in trade (agriculture) and in services (freedom of movement for professionals through Mode 4), but is unyielding as regards any substantial reduction in Indias very high tariffs.

The India-EU agenda is so extensive now that trade and investment issues no longer occupy centre-stage. Indeed, they come at the tail end of the 23-page Joint Action Plan for an India-EU strategic partnership, which Prime Ministers Manmohan Singh and Tony Blair endorsed at their New Delhi summit last September. And this is as it should be. The fact is that India (and the EU) have come a long way since New Delhi established diplomatic relations with the then six-nation European Economic Community some 45 years ago. The agenda now includes subjects which were not even on the horizon when Mr Aiyar was working hard to promote Indias interests in Brussels.

The most striking developments are in the field of space research, of course. The EU and India have already reached an agreement in principle on Indian participation in the Galileo project. The EU is hoping that spring will see the two sides signing a comprehensive agreement.

Speak to EU officials here and you are left in no doubt that they are determined to strengthen ties with India across the entire range of political, economic, scientific, environmental, social and cultural relations.