Time To Focus On India, EU Strategic Partnership

Written by Malcolm Subhan | Updated: Jun 27 2004, 04:17am hrs
Does the 25-nation European Union (EU) exist Well, yes and no. It exists for exporters, since it is the worlds largest trading bloc, with a two-way trade of around $2 trillion last year. The EU also exists as a global investor; its foreign investments totalled over $2 trillion in 2002. If the EU exists for Indian business and business organisations, it doesnt seem to exist for the countrys political masters. Hardly any of them have made the trip to Brussels, which is home to the EUs decision shapers and makers and to some 10,000 lobbyists.

The EUs executive arm, the European Commission (EC), clearly, is determined to shift the focus of India-EU relations from trade to wider political issues. The EU is Indias largest trading partner: 23 per cent of Indias two-way trade was with the EU in 2002, compared with 14 per cent with the US and 2 per cent with Russia.

The EC believes the time has come to promote a strategic partnership between the 25-nation EU and India. It has, therefore, sent its political masters, the Council of Ministers and European Parliament, a detailed set of proposals on June 16, for strengthening the economic partnership and promoting mutual understanding.

Trade and investment remain the cornerstone of India-EU relations in the ECs policy paper, which covers everything from business-to-business co-operation and finance to migration, biotechnology and space.

The EC is hopeful that the member states will endorse the broad thrust of its proposals in time for the meeting between Prime Minister Manmohan Singh and his EU counterparts in Holland in mid-October for the fifth EU-India summit. The EC also hopes that Indias ministry of external affairs will respond with its own policy paper in time for the summit.

If it does, the proposals from Brussels and New Delhi could form the basis for a seminar between the main Indian and European stakeholders, resulting in non-binding guidelines. These would take the form of an Action Plan and a new Joint EU-India Political Declaration. And if all goes well, the next summit, in 2005, could endorse both texts.

Clearly, the EC is to be congratulated for coming up with a forward-looking strategy, as set out in its paper of June 16. Except that its latest policy paper is quite unnecessary. In fact, there is a danger that some of the EUs 10 new member states may conclude that boosting trade and investment with India in biotechnology or IT, for example, is contrary to their national interests.

The plain truth is that the legal basis and the institutional machinery for implementing the proposals set out in the ECs 47-page communication to the member states already exists. These are listed in the communication itself, and include the EU-India co-operation agreement and the joint political statement that ministers signed in 1993.

Virtually all the activities listed by the EC could, therefore, have been undertaken at any time in the last 10 years. The question, which the EC never raises, much less answers, is why they were not undertaken. Until both the EU and India can answer this question, the chances that the proposals put forward by the EC will be implemented are slight.

An absence of political will on both sides is the obvious answer to this question. The 1994 co-operation agreement is detailed and comprehensive. However, while it provides for the machinery needed to implement it, the agreement will remain a statement of intention in the absence of political will. And the act of bringing together foreign ministers, and even prime ministers, for half a day will not generate enough political will to last a year.

The absence of political will in New Delhi can be partly explained by the fact that since 1962, India has been mainly concerned with making sure that access to the EU market is as free and fair as possible for its exporters. The absence of political will in Brussels is partly due to the preference of the larger member states for dealing with India bilaterally.

The time has come for a shift in focus. For example, the 40-year concentration on trade in machine-made products has prevented both from building a partnership based on their strengths in S&T.