FTAs as Catalysts for Growth in Global Trade: CII Annual Business Summit 2026

• Thank you to CII for the invitation to this eminent panel on FTA's. I am clearly the outlier here, not being quite as a trade expert as my fellow panelists. 

• But I am definitely a trade supporter and an FTA advocate – as Rajesh would know.

• Three main messages I would like to share with you today from an EU governmental perspective:

  1. The Brutalisation of Trade resulting from wars, trade wars and weaponisation of interdependence which impact both India and the EU, is a new reality of geo-economics that is here to stay. We must adapt.

  2. Retreating from Free Trade is not the solution. Diversification is. It offers you options to reduce dependencies, access to markets to balance and build on new opportunities. That’s the EU approach.

  3. Trade is not an end in itself – it has to be part of a robust economic statecraft. Openness cannot be equated with weakness. It must serve your competitiveness, your development, the security of your economy and your supply chains. The EU is fully on that page.

On all these three points, I see a great degree of convergence between the EU and India, and the foundations of a transformative agenda for our two economies.

1. Challenges from the brutalisation of trade - 

• Trade and Wars don’t fare well together. Russia’s war against Ukraine and the war in West Asia cause the same challenge in terms of fuel, fertilizers and food. If not a supply crisis, they have caused a pricing crisis, which is as devastating due to the ‘transmission’ effect to the rest of our economies. The longer the war, the deeper and more lasting the global economic impact. It comes at a cost for both the EU and India, but our ability to adapt may offer unforeseen opportunities : new supply chains, shifting certain patterns, from fossil to clean energy for example, redirecting investments to safer markets.

• Trade wars, specifically tariffs wars, resulting from the US Trump Administration decision to apply so-called ‘reciprocal’ tariffs has caused further disruption, in terms of market access for companies. For the EU the shock is significant [EU-US trade: EUR 1.7 trillion; EU-US FDI stock: EUR 4.8 trillion],

• China’s weaponization of trade whether indirectly through its overflow of goods’ exports resulting from excessive production capacities caused by state-directed industrial policy and massive subsidies, or directly through coercive measures vis-à-vis partners (Critical minerals, magnets are a case in point) are causing major global imbalances and uncertainties that harm the EU industry [EU’s trade deficit with China EUR 360 billion, almost tripled in the last decade]. Global imbalances will be the leitmotiv of the G7 meeting in  France in June to which PM Modi has been invited.

• In effect the US and China challenges are breaking the over 30 years old Marrakesh Consensus that led to the creation of the WTO in 1995 by defining the trade relations on a zero-sum game basis (‘my loss is your win’). It is no longer Free trade but Mercantilism - negotiated or imposed trade. 

• Both US and China are not likely to change course in the foreseeable future. And we will have to deal with the externalities of these policies for some time. 

• But as EU, we are not powerless. We have great assets: Among others, 

  • we have the largest single market in the world [450 million consumers, 15% of global GDP], a market coveted by all economic powers US and China included. We want to untap for ourselves the potential of this Single Market (The Letta report of 2024, titled: ‘Much more than a Market’).

  • We are the largest trade block in the world with 16% share in global trade in goods and services [US, China – 14%]. The EU is the number one trading partner for 66 countries that represent 55% of world GDP [China - 77 countries and 24% of world GDP; the US - 32 countries and 21% of world GDP]. We are the world’s number one investor with 33% share of global FDI. But it is not just about quantitative measurement, it also qualitative: the products we deliver, the predictability and stability and rule-based nature of our engagement with partners. We prefer partnership over protectionism; predictability over pressure and trust over transactionalism. This is becoming a strategic asset.

2. Diversification as effective Trade strategy. 

• Not only the EU has the largest network of FTAs in the world. But we continue to diversify our trade flows in fast-speed mode. Because it serves as a ‘shock absorber’ ; reduces our dependencies, opens new markets; and it goes in sync with the search for more resilient and trusted supply chains. 

• We have today 45 preferential trade agreements with 80 countries, covering nearly 50% [49.1%] of our trade. A good example is our trade with the CPTPP group [Australia, Brunei, Canada, Chile Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, UK, Vietnam], which has overtaken our trade with the US and China [in 2025, CPTPP - 21%; the US - 18%; China - 15%].

• The EU has recently concluded FTA negotiations with Mexico, Mercosur, Indonesia, India and Australia. Once these deals come into force, 53% of our trade will be conducted on preferential FTA terms. 

• And we continue negotiating FTAs with new partners: The Philippines, Thailand, Malaysia, the United Arab Emirates, among others. Because Partners around the world are turning towards the EU as prime partner stable, predictable, rule-based: you get what you see. 

• I should signal our approach to FTAs is flexible and tailor-made, specific to each partner.

• I can only note the strong similarity here with India, which has also doubled down in the conclusion of FTAs with many new partners.

• Since yesterday was Mothers’ Day, let me still say a brief word about the EU-India FTA, the ‘Mother of All Deals’.

• It is truly a win-win deal, owing to the complementarity and scale of our economies. Businesses will save on lower tariffs and cheaper production inputs. It is estimated that thanks to reduced tariffs the EU and Indian exporters will save several billions of EUR on duties annually.

• The FTA will give additional boost to our bilateral trade in goods and services, which currently stands at over EUR 190 billion. It is estimated that EU’s goods exports to India will double by 2032. With preferential access to the EU market Indian companies will be also well-positioned to significantly increase their sales to the EU. 

• Trade drives jobs and investments. The EU Economic Footprint study, which we published last week, found that 6,000 EU firms created 3.7 million direct jobs in India and over 2 million indirectly (2024 figures). A recent survey by FEBI revealed that 75% of EU business in India expect to increase employment and investment once the FTA is in place.  We look forward to 1,500 Indian companies present in the EU to invest more and create jobs likewise. 

• To reap full benefits from the FTA, we have to deal with the unfinished business. Secretary Agrawal, dear Rajesh, let’s conclude the chapter on investment liberalisation in non-services sector left out from the FTA, let’s finish negotiations on the Investment Protection Agreement and Agreement on Geographical Indications. Let’s tear down the barriers that stifle trade, such as for example the QCOs.

   

3. Last, Trade /FTAs must be part of a robust Economic statecraft.

• While we expand our FTA network, we seek to ensure two things:

1. that our openness is not abused. 

• The EU is increasingly exposed to coercive practices. We are ready and have tools to counter them. We have strengthened the application of our trade defence instruments. Over the last two years, we applied over 30 trade defence measures annually, including countervailing duties on battery electric vehicles from China. The EU is the first jurisdiction in the world to countervail cross-border subsidies deriving from China’s Belt and Road initiative. 

• We have other autonomous instruments ready to be deployed, if necessary:

  • Foreign subsidies regulation and international procurement instrument, to tackle unfair trade practices.

  • FDI screening and export control, to tackle security risks.

  • Enforcement regulation, to tackle breaches of our trade rights.

  • And our ‘big bazooka’ – the anti-coercion instrument, to tackle economic coercion.

• We have adopted a clear framework for our EU economic security policy.

2. That our trade agreements are fully embedded in integrated strategic partnership agendas. 

• What we have achieved in our relationship with India is the best illustration and demonstration of this point. FTA is not just about tariffs lines and boosting trade. It is a catalyst for the closer integration of our economies and our ecosystems.

• Our new Comprehensive Strategic Agenda – agreed at the EU-India Summit last January, covers the full spectrum: Innovation partnership to scaling-up with the startups hubs. The Trade and Technology Council will give further guidance on the strategic sectors and value chains in which we will work together, with downstream our Blue Valley initiative, which at the ground level will foster joint investment and production in those sectors. In parallel, we are promoting Talents and Skills’ mobility.

• The first ever EU-India Business Forum organized in the margins of the EU-India Summit last January, reflects our commitment to have European and Indian companies closely associated to our pro-business and pro-growth agenda.

• Our FTA and our Strategic Agenda therefore fully align the logic of economic efficiency with the necessities of supply chain resilience, integration of our ecosystems and economic security. 

• This is the new template, and the key to success.

Thank you for your attention.