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European Union and India Sign Landmark Free Trade Agreement

The European Union and India sign major free trade agreement to eliminate tariffs and build joint security cooperation.

What Happened?

The European Union (EU) and India signed a landmark free trade agreement, which will allow free trade of goods between all twenty-seven EU member countries and India, the world’s most populous nation. Under the terms of the deal, tariffs will be significantly reduced, and a joint security partnership will also be established.

Taken together, the EU and India represent over two billion people and roughly one-quarter of the total gross domestic product for the world. According to the BBC, the agreement will open portions of India’s widely known protectionist domestic market with an emphasis on exporting manufacturing and services; in return, middle-class Indian consumers will receive lower prices for European cars and wine.

Why it Matters

The trade deal, while enormous, is just one part of a much larger and more comprehensive framework for international cooperation taking shape between the EU and India.

While the Trump Administration has pulled the United States back from a number of other international cooperative efforts, the rest of the world is moving on without American leadership or even involvement. The EU-India partnership is one of the largest such efforts to change the nature of the world economy in what may become known as a post-American world.

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India has the world’s largest population, and its government has been working to find ways to modernize India’s economy to help provide more opportunities for its swelling workforce and consumer demographics.

The new trade deal with the EU is likely to play a major role in helping India’s economy become more modern by opening it up to trade that was previously restricted due to protectionist policies. Though the deal is a win for India, there may be some initial disruptions as Indian businesses that thrived for years due to the absence of competition may now face strong competitors.

For the EU, gaining access to such a large consumer market is a solid economic victory. With tens of millions of potential new consumers in India to purchase European goods, the sale of those goods is likely to increase, which in turn will probably fuel increased production, meaning more jobs and employment for European workers.

While tariffs from the United States have hurt Europe’s economy, the deal with India could provide the EU with a way to grow its economy without increasing trade to the United States.

How it Affects You

There is a growing consensus in Europe and Asia that a world dominated by American economic and military power is ending and that a post-American future is already taking shape.

While the U.S. will continue to play a major role in world affairs for the foreseeable future, that role is shrinking due to new alliances and partnerships like the one between India and the EU.

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