Upcoming Elections In EU Member States May Delay India-EU Free Trade Agreement Talks

(MENAFN- Live Mint) New Delhi: Upcoming elections in several European Union (EU) member-states, including Germany, Romania and Croatia, are expected to delay India's plans to finalize the free trade agreement (FTA) with the 27-nation bloc, two people aware of the matter said.

While the next round of FTA negotiations is expected in the first quarter of 2025, political transitions in key EU countries may shift priorities and hinder progress on the trade pact.

Germany, the EU's largest economy, will hold its federal election on 23 February, followed by the Hamburg state election on 2 March5, both of which are expected to dominate the country's political discourse.

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The ninth round of FTA negotiations was held in New Delhi from 23–27 September 2024. The EU remains India's largest trading partner, with bilateral trade in goods reaching €124 billion in calendar year 2023, accounting for 12.2% of India's total trade. The EU is also India's second-largest export destination, with a 17.5% share, just behind the US at 17.6%.

Electoral politics can throw trade talks into uncertainty as different political parties have different policy priorities. Most recently, the change in government in the UK have delayed FTA talks. It's not yet certain when negotiations will resume.

On hold since polls

Talks for the 14th and final round of the FTA with the UK began in January 2024 but were put on hold in May after the elections were announced. Even after the formation of a new Labour government in July, the talks have not resumed.

"The upcoming elections in the member-states of the EU are a matter of concern and are likely to cause delays in finalizing the terms of negotiations, as each member state has its own priorities and concerns that need to be addressed during the process," said the first of the two people cited above.

In Romania, presidential elections are scheduled for 23 March, with a possible second round on 6 April. This election will decide Romania's head of state, a significant player in foreign policy and national security matters.

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Meanwhile, Croatia has already started its electoral process, with the first round of its presidential election held on 29 December 2024, and the second round set for 12 January.

"We are in constant touch with the EU team and remain hopeful of moving forward, as we have not yet received any official communication regarding the deferment of the talks," the second person said.

Citing the case of the UK, this person said, "The process was ongoing even during the elections in India, but it was paused by the UK."

Experts caution that political uncertainties within individual member states often slow decision-making at the EU level, as trade talks require consensus among all 27 members.

Overlapping timelines

“The overlapping timelines of these elections in major EU economies may reduce the bloc's focus on external negotiations, including the India-EU FTA,” said Abhash Kumar, assistant professor, economics, Delhi University.

“The outcomes of these elections are expected to influence not only national policies within the EU but also the bloc's internal cohesion and its ability to address global challenges effectively," he said.

Queries emailed to the spokespersons of the commerce ministry and the EU remained unanswered till press time.

During the 9th round of talks, India and the EU discussed a 12-point agenda, which included deforestation, electric vehicles, sustainability, carbon tax or Carbon Border Adjustment Mechanism (CBAM), sanitary and phytosanitary (SPS) measures, technical trade barriers, textiles, services benefits for IT professionals, trade of more goods and services, taxes on liquors, among others.

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“Regular electoral cycles across individual European countries, and even periodic elections at the continental (MEP) level, invariably tend to undercut progress on trade agreements, with snap polls in countries such as the impending one in Germany, only accentuating matters,” said Dattesh D Parulekar, assistant professor, international relations, Goa University.

“This said, the countries slated to helm European Presidencies over the ensuing three years are also not going to help matters, as they and their incumbent dispensations are seen as more focused on internal EU issues of discord, rather than forging trade ties externally, in times of increasing protectionism and prioritization of narrow economic interests,” said Parulekar.

Germany, Romania, and Croatia play important roles in shaping the EU's trade agenda, with Germany leading economic negotiations, Romania contributing to strategic discussions in Eastern Europe, and Croatia connecting the EU with the Balkans, all of which influence the India-EU free trade agreement.

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