EU Favours India Over China for Free Trade

The European Union could soon turn from China to India for free trade. 

The EU has suspended plans to ratify trade deals with Beijing and at the same time, it is trying to revive stalled trade talks with New Delhi. 

In December 2021 the European Commission announced plans to ratify the comprehensive agreement on investment or C.A.I - a proposed investment deal between the EU and China. As of April this year, this deal has not yet been signed.

On Monday (May 3), the European Union trade commissioner indicated that the deal may never see the light of day. He said that all efforts to ratify the agreement have been put on hold because the geopolitical environment is "not conducive" to the deal's ratification. This is indicative of the growing animosity between the EU and China.

The bitter feelings between the EU and China started in the month of March when the EU imposed sanctions on Chinese officials over human rights abuses against Uighur Muslims in Xinjiang. in response, China imposed its own sanctions on the EU parliamentarians. Some members of the European Parliament vowed to never ratify the deal.  Read more

Now, the EU trade commissioner's remarks have added more uncertainty to the deal's future. 

"The agreement needs to be legally reviewed and translated before it can be presented for adoption and ratification. Chinese retaliatory sanctions targeting members of the European parliament are unacceptable. The prospects of ratification will depend on how the situation evolves," said Valdis Dombrovskis, EU trade commissioner. 

Meanwhile, India and the EU have long held conversations on ways to enhance trade. A free trade pact was discussed way back in 2013 but the talks were put on hold as there were disagreements on technical issues like tariffs, patents, and data security, etc. but now the two sides are on their way to settle these differences.

This Saturday a summit will be held between EU leaders and the Prime Minister of India Narendra Modi. The aim will be to revive the stalled discussions. 

"We agreed to resume negotiations for a balanced ambitious, comprehensive, and mutually beneficial trade agreement. Our partnership will promote transparent, viable, inclusive, sustainable, and rules-based connectivity," the draft summit statement said. The statement does not mention China but its focus on certain values sounds like an allusion to the Chinese abuses and its aggressive expansionist territorial claims. 

It also stated, "we emphasize our commitment to free, open, and inclusive Indo-Pacific space, underpinned by respect for territorial integrity, sovereignty, democracy, and rule of law." 

The outcome of the deal depends on how the negotiation between the EU leaders and PM Narendra Modi fares this Saturday. Irrespective of what the outcome is, it is sure that the talks will largely hinge around the Indo-Pacific region and when it comes to maintaining a stable, free and open Indo-Pacific, India is the world's best bet. 

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