Economic growth without social justice: EU­-India trade negotiations and their implications for social development and gender justice

"The European Union firmly believes that social development must be a parallel objective to economic development"? Exploring the main interests behind the FTA on both sides, the paper asks whether considerations regarding social inclusion, poverty eradication, and gender equality are informing trade policy-making. It looks at trade liberalisation and the FTA procedures through the prism of social justice and human development. Since bilateral trade negotiations are held in great secrecy, the paper wishes to provide civil society actors in the EU and India with background information and to build their capacity to engage critically in policy-making on trade and development and in transregional networking.

The 7th EU-India Summit held in 2006 in Helsinki, Finland, decided to step up efforts towards a “broad based bilateral trade and investment agreement” between India and the EU. On 28 June 2007, negotiations which are supposed to be completed within two years were launched in Brussels. The negotiations on a bilateral trade and investment agreement between the “two largest democracies in the world” have to be seen in the context of fast-changing global economic relations and the growing significance of the emerging markets in Asia. Both sides consider an export-led and free-trade-oriented strategy a powerful driver of economic growth, development, and employment. India is in the process of adopting in a “grand leap forward” the liberalisation model, enhancing its export industries in manufacturing and information technologies, and its access to foreign markets.

It has already become an important production base and outsourcing destination for EU operators. The EU wants to maintain its competitiveness in the world economy by gaining access to the large Indian market, expanding investment, the export of goods and services, and ensuring favourable trade rules and regulations. While the bilateral free trade agreement (FTA) is supposed to prepare the ground for a “strategic partnership” in trade and investment, India is still the main recipient of EU development aid. The Country Strategy Paper (CPS) for India 2007-2013 provides 470 million euro for both economic and development cooperation. While in the past decade Indian economic growth rates rank second in the world behind China, UNDP ranked India’s human development at 126, and gender-related development at 96 in its global comparison.1 One quarter of the population of India lives below the poverty line.

This paper attempts to place the FTA negotiations in their historical and topical context, and questions the coherence between the development aid agenda on the one hand, and the trade and investment agenda on the other. Does it still hold true what the European Commission stated in 1996 aiming at enhancing the EU-India partnership: “The European Union firmly believes that social development must be a parallel objective to economic development”?2 Exploring the main interests behind the FTA on both sides, the paper asks whether considerations regarding social inclusion, poverty eradication, and gender equality are informing trade policy-making. It looks at trade liberalisation and the FTA procedures through the prism of social justice and human development. Since bilateral trade negotiations are held in great secrecy, the paper wishes to provide civil society actors in the EU and India with background information and to build their capacity to engage critically in policy-making on trade and development and in transregional networking.