India’s fastest ever trade deal and the war economy
On 18 February, 2022, India signed a comprehensive economic partnership agreement with the United Arab Emirates (CEPA).
The deal – which came into force On 1 May – is India’s first free trade agreement with the United Arab Emirates (UAE) and took less than three months to negotiate, making it the fastest agreement of its kind that India has ever reached.
According to the agreement, the United Arab Emirates will have access to 90% of India’s tariff lines at preferential import duties, while India will have access to 97% of the United Arab Emirates’ tariff lines at preferential import duties.
The CEPA – which is expected to push bilateral trade to $100 billion in the next five years – illustrates how it is still possible in some areas of the world to boost a national economy and chart a vast and mutually beneficial commercial co-operation for the benefit of a large number of people.
It is also a rare example of a wide commercial negotiation cut in just a few weeks. Considering that big economies like China and the USA do not have trade agreements with the United Arab Emirates, this deal marks a significant diplomatic success in India-UAE relations.
This speed and efficiency sharply contrasts to other global trends. Notably, the EU has suffered from the sanctions and counter-sanctions involving its trade with Russia since February.
EU officials will be somberly reminded that their new trade deal with China announced on 30 December has yet to come into force. (As I have discussed previously).
What stands out here is an unusual attitude from the EU that apparently is more focused on window-dressing as opposed to a consistent approach to sealing the deal.
The union has been divided when it comes to essential policies, with member states taking very different approaches to dealing with the pandemic, something that may repeat itself in the face of the Russo-Ukrainian War.
A strong motivating mission of national interest is crucial for reaching effective agreements in the international arena. Equally important is the ability to score win-win solutions. Indian and UAE leaders have proven that they possess both.
These remarks are not academic gimmickry. The path shown here is truly key to setting the stage for consistent growth both socially and economically.
The CEPA deal should raise a red flag to the European leaders to finally adopt the unity and shared vision that the EU needs in our present global context.
Image credit: MEAphotogallery, under CC BY-NC-ND 2.0 licence.