New Delhi: A free trade agreement (FTA) between India and the European Union (EU) could be a tool to balance against the economic power of both the US and China, Portuguese foreign minister Paulo Rangel said Thursday.
“Free trade agreements have a huge impact on the balance of geopolitical power. Agreements between the EU and Mercosur (the South American common market) and one with India would prevent just one or two countries from shaping the global trading order,” Rangel said at an interaction at the Observer Research Foundation (ORF) in Delhi. He is in India from 12 to 15 December.
“In the next few years, ties in the world will likely move from transnational to transactional, looking at the change in administration in the US…I hope both the EU and India would come to an understanding on the comprehensive free trade agreement, to create a large economic bloc to challenge both the US and China,” the minister added.
This is Rangel’s first official visit to India and, after a visit to Portugal’s former colony Timor-Leste, is the first visit to an Asian country by a representative of the new government in Lisbon.
For Rangel, it is a “clear message on how important India is” for the Iberian country. He is set to meet external affairs minister S. Jaishankar Friday before departing for Goa.
The India-EU FTA, which has been under negotiation since 2022, had seen a lot of momentum in the early days. However, since October, both sides have publicly said that progress has slowed down and key differences are yet to be overcome.
In October this year, Piyush Goyal, the Union minister for commerce and industry, said at the launch of the Federation of European Businesses in India (FEBI) that progress in FTA negotiations had been “marginal” given the “irrational standards” set by the EU, which have acted as irritants in trade.
EU regulations surrounding deforestation and the common border adjustment mechanism (CBAM) are some of the major issues for India. CBAM is a border tax the EU will be introducing on seven energy-intensive sectors, including steel, cement, fertilisers and engineering goods.
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‘Lisbon will always support any FTA with India’
At the end of October, German Vice Chancellor Robert Habeck during a visit to India had suggested that the EU needs to rethink its approach to an FTA with India, and potentially focus on a “shortcut deal” rather than a comprehensive one.
However, given that negotiating trade deals is solely the responsibility of the European Commission, it is up to Brussels to make a decision on such a move.
For Portugal, the FTA could potentially help boost trade with India, which is worth $1.3 billion in goods currently, according to data from the Indian Ministry of Commerce and Industry.
“We can invest in India to help boost ties. However, we are not a particularly large economy and we have a population of 10.6 million people… we have developed strong bilateral ties, but the focus is to boost economic, commercial, scientific and academic ties,” said Rangel.
The minister expressed hope that India and the EU would “be flexible” and said that Lisbon would “always support” any FTA with India, even if it has negative “impacts” in some sectors for Portugal.
“If you want to have peace, you must have a balance of power. The EU FTA with Mercosur and one with India would change geopolitics and geoeconomics, and bring about that balance,” said Rangel.
(Edited by Nida Fatima Siddiqui)