Most Favoured Nation: Oh, India.

Trade negotiations with India, subsidies as far as the eye can see, Super Denis, and the downsides of trade liberalisation

India is like the anti-UK. As much as the UK desperately wants to do as many free trade agreements as possible, that’s how much India doesn’t really want to do free trade agreements (even if it sometimes says it does).

India’s most recent foray into trade liberalisation ended in crushing disappointment, when, after years of talks, India pulled out of the RCEP negotiations at the last moment.

It’s therefore difficult not to roll your eyes the moment someone mentions trade negotiations with India. But that doesn’t stop them doing it. Both the EU and the UK have trade talks with India of some kind or other in the works. A fully-fledged free trade agreement? Probably not. A little bit of something, one day? Perhaps.

But beyond scrapping the 150% tariff on imported whisky, and the 60-100% tariff on imported cars, what do companies actually want to get out of a free trade agreement with India? On that topic, this 2018 leaked UK-India joint scoping exercise remains an excellent resource.

[You should also read the scoping exercise if you’re interested in what India is looking for from the UK. There’s some interesting stuff in there on pension contributions and aflatoxin levels … for example.]

See if you can spot the theme:

The UK chemicals industry would very much like India to consolidate its own single market and develop a single set of rules and approval processes.

The UK’s alcoholic beverage sector would also very much like India to consolidate its own single market and develop a single set of rules and approval processes.

And, would you believe it, the UK’s life sciences and medical devices sector would also very much like India to consolidate its own single market and develop a single set of rules and approval processes.

Hmmm. Well sure. That all sounds great. We’d all love a complete overhaul of the Indian economy and to fast track the development of its internal single market by 20 years. But at some point we are probably going to have to ask whether any free trade agreement could deliver the kind of structural economic reform desired here.

I suppose the optimistic take is that a trade deal with either the EU or the UK could provide some political cover for an India administration hoping to push through a load of these reforms anyway. But actually trigger the reforms in the first place? I’m not convinced.