At a time when the trade deal between the EU and Mercosur is in the final process of ratification, the European Commission also managed to reach an agreement about an FTA with India.
European farmers welcome new deal
European farmers appear more positive about the new trade agreement with India than they were about Mercosur. The European farmers’ organisation Copa Cogeca has called the outcome of the negotiations “balanced” for Europe’s farmers as well as agricultural cooperatives. With the agreement, Europe strengthens its access to a major growth market, while protecting sensitive sectors, according to Copa Cogeca.
The farmers’ organisation sees many opportunities in India with its 1.45 billion consumers. According to Copa Cogeca, the agreement between the EU and India demonstrates that it is perfectly possible to pursue an ambitious trade policy while protecting sensitive agricultural sectors, in “challenging circumstances in global trade.”
The signing between the Commission and India marks a historic moment, as it will create a free trade zone with 2 billion inhabitants.”
— Commission president Ursula von der Leyen
No quotas for key agricultural products
Agriculture was a key element of the negotiations and is a sensitive issue for both sides. Like Europe, India also would like to protect certain agricultural sectors. Europe and India have decided to exclude sectors designated as “sensitive” from the agreement.
For Europe, this means no tariff reductions or new quotas for beef, sugar and poultry, among others. These are sectors that are highly sensitive under the Mercosur agreement with various countries in Latin America, as that agreement does allow for additional imports of these products. There will also be no new market access for milk powder and soft wheat.
Conversely, India has designated dairy, grains, poultry and certain types of fruit and vegetables as sensitive products, according to The Times of India. The full text of the agreement, with details about which products are specifically covered, is not yet available.
The agreement between the EU and India demonstrates that it is perfectly possible to pursue an ambitious trade policy while protecting sensitive agricultural sectors, in ‘challenging circumstances in global trade.’”
— European farmers’ organisation Copa Cogeca
Some agri and horti sectors to benefit
According to European Commission, several agricultural and horticultural sectors will benefit from the new agreement. India will reduce import tariffs on certain agricultural and horticultural products, such as wine, olive oil, margarine and other vegetable oils, kiwis and pears, fruit juices, processed foods (such as bread, biscuits, pasta, and chocolate), sheep meat and certain processed meats, such as sausages. India will completely eliminate import duties on olive oil. For wine, they will be gradually reduced from 150% to a maximum of 20%.
Conversely, the European Union will open quotas for imports of sheep meat and goat meat, sweetcorn, grapes, cucumbers, dried onions and rum.
Savings expected for EU exporters
According to the European Commission, reducing import tariffs will save European suppliers €4 billion per year. Among other things, tariffs on car exports will be gradually reduced from 110% to 10% and import tariffs on car parts will be completely eliminated. Tariffs on machinery, chemicals and pharmaceuticals will also be largely eliminated. India, conversely, expects to benefit from the elimination of import duties on textiles, clothing, leather, shoes, gemstones and jewellery.
Deal needs final approval
The agreement is not yet finalised. Now that the text has been fully negotiated, the European member states and the European Parliament still need to approve it – similarly to the process the EU-Mercosur deal is now happening. The European Parliament’s approval is not a walk in the park. On the Indian side, also ratification will be necessary.
A historic trade milestone
The signing between the Commission and India marks a historic moment, as it will create a free trade zone with 2 billion inhabitants, according to Commission president Ursula von der Leyen. So-called “sensitive” agricultural sectors, however, have been disregarded.
