Trade Deals with the United States and European Union
India is actively pursuing trade deals with the United States (US) and the European Union (EU), aiming for agreements that are fair, balanced, and mutually beneficial.
Current Context and Developments
- The recent trade deals with Oman and New Zealand have raised expectations for similar deals with the US and EU.
- European leaders are visiting India, raising hopes for advancing the EU trade agreement.
- India's ambassador to the US is pushing for an early trade deal, with expectations set for completion by March 2026.
Challenges with the US Trade Deal
Donald J. Trump’s presidency presents challenges due to shifting demands and political instability.
- Trump’s inconsistent demands include reducing trade deficits and acknowledging his role in brokering peace with Pakistan.
- Personal whims could delay or derail agreements, as policies may not withstand judicial scrutiny in the US.
Internal Challenges in the US
- The US faces internal political divisions, with the Trump administration dealing with fallout from the Epstein scandal affecting elite consensus.
- Contentions exist between Trump's supporters and opponents within his own party, impacting trade policy.
Challenges with the EU Trade Deal
- The EU is experiencing internal rifts, notably over its stance on Ukraine and sanctions on Russia.
- Political divisions impact the EU’s ability to finalize trade deals, with internal opposition from countries like Italy affecting the Mercosur deal.
Future Prospects
The political and economic instability in both the US and EU suggests that achieving a trade deal may take longer than expected.
- The EU's internal challenges could weaken its collective eagerness to finalize trade deals.
- India must prepare for potential delays and consider worst-case scenarios in its national trade strategies.
Conclusion
The outlook for significant trade deals with the US and EU remains uncertain due to internal political dynamics and economic challenges within these regions. India should plan accordingly for delays and uncertainties.
