Trump and China Boost EU–India Relationship

The relationship between the European Union and India may be about to finally fulfill its huge potential. It has long been described as a relationship between “natural partners” but it has also disappointed in terms of concrete results. However, two developments — the election of Donald Trump as president of the United States and the challenge of the rise of China — may change that. The recent India–EU summit drew attention to the potential for the relationship to balance the unpredictable twists in U.S. foreign policy, and to check China’s deviation from international norms.

The summit, which was held in New Delhi on October 6, helped put the EU–India relationship back on track (last year’s summit had followed an unfortunate four-year gap). The EU and India came out with clear support for continuing with nuclear agreement with Iran and for the Paris climate agreement. Both are useful messages to the Trump administration.

There is much that links the EU and India. The EU is India’s largest trading partner and is the source of 24 percent of its ODI inflows.

Meanwhile, recognizing the importance of connectivity, the EU and India underlined that infrastructure initiatives must be based on “universally recognized international norms, good governance, rule of law, openness, transparency,” while observing financial responsibility, environmental protection, and social sustainability. This was clearly an oblique reference to China’s Belt and Road Initiative, of which India has been particularly critical — not least because part of it, the China–Pakistan Economic Corridor, passes through sovereign Indian territory in Kashmir.

There is much that links the EU and India. The EU is India’s largest trading partner and is the source of 24 percent of its ODI inflows. The EU hosts 2.1 million persons of Indian origin and 50,000 Indian students in universities, and has provided 5,000 with ERASMUS scholarships. 6,000 European companies operate in India.

However, in the past, the EU has not taken leading positions on some issues of concern to India, such as Pakistan-linked international terrorism and China’s challenge to the rules-based order. A closer political dialogue would be useful for both to deal with growing uncertainties in the global system. At the summit, they articulated common positions on Afghanistan, Myanmar, North Korea, Syria, Libya, Ukraine, and the Middle East peace process.

Against the background of the election of Trump and the rise of an authoritarian China — both threats to the liberal international order — the idea of the EU and India as “natural partners” that share values also takes on new meaning. In their joint statement after the summit, the EU and India affirmed their commitment to further deepen the strategic partnership “based on shared principles and values of democracy, freedom, rule of law and respect for human rights, and territorial integrity of states.”

They agreed on the need for the global community to address the menace of terrorism and safeguard the security of the global commons — sea lanes, cyberspace, and outer space. Their common endeavor and ongoing bilateral dialogue will support efforts toward applicability of international law in cyberspace, set norms for responsible behavior of states, protect privacy, and deter against breaches.

Africa was identified as another important area for closer cooperation. Many European countries have historical links to the continent, which is today a source of destabilizing refugee flows. India too has historical linkages and empathy following from commonalities in historical experience and has contributed to capacity building and in peacekeeping missions. India hosts India–Africa Forum summits and has now been invited to be an observer at the next EU–African Union summit.

 India already has critical partnerships with EU member states in defense, space, civil nuclear, trade, investment, and technology, which could be taken further with EU-wide endorsement and effort.

The EU and India also agreed to focus on skills, innovation, start-ups, urban infrastructure for transportation and sanitation, frontier areas of science and technology in water, health and clean energy, reducing resource intensity in production, and civil nuclear energy including fusion research and safety. An Investment Facilitation Mechanism has been created in India to address problems of EU investors. The European Investment Bank has committed to lend €1.5 billion over a year to support projects in urban transportation and renewable energy.

Differences on market access and data security continue to block progress on the Broad-based Trade and Investment Agreement, the planned free trade agreement that has been stalled since 2013. But global trade and production norms are currently under challenge and the EU also has to address the consequences of Brexit, so perhaps trade is an issue that is better dealt with somewhat later.

The EU–India relationship has huge positive potential for both partners. India already has critical partnerships with EU member states in defense, space, civil nuclear, trade, investment, and technology, which could be taken further with EU-wide endorsement and effort. But the summit illustrated that a further development of the relationship could also produce spinoffs in putting China on the defensive in its deviation from the rule of law and in balancing some of the short-term uncertainties in U.S. policies.