EU and India aim to sign a free trade agreement by year's end

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As Donald Trump threatens the European Union with new tariffs on goods, the EU is desperately seeking new trading partners, and India may be among the first following  announcement on Friday that a free trade agreement would be signed by the end of the year.

“A free trade agreement between the EU and India would be the largest deal of this kind anywhere in the world,” president of the Commission Ursula von der Leyen said on Friday in New Dehli, adding: “This is why we have agreed with Prime Minister Modi to push to get it done during this year.”

That timetable is ambitious, given that the last two decades have produced little in the way of results between the two sides, who began negotiations over a trade deal in 2007, but subsequently saw these frozen over a decade between 2013 and 2022.

The EU is making India a priority in an increasingly uncertain geopolitical context, where existing alliances appear fragile. “I am well aware it will not be easy” von der Leyen said, “but I also know that timing and determination counts, and that this partnership comes at the right moment for both of us.”

The EU hopes to get access to the India market for its cars and spirits, despite high India tariffs, as reported. It also hopes to conclude an agreement on investment and  Geographical Indications quickly.

The EU is expecting difficult negotiations on agriculture, since farmers fear unfair competition from non-European importers. The issue is also thorny for India, which relies mainly on small scale farms for production.

India will certainly not be an easy negotiating partner for the EU, which risks criticism for protectionist environmental rules, especially in relation to its Carbon Border Adjustment Mechanism (CBAM), the EU green legislation that applies to imports in the EU. “These are fair measures, WTO compatible,” a senior EU official said, adding: “These are illegitimate concerns that we are ready to address.”