India-UK move towards ‘Early Harvest’ trade pacts in JETCO meet

Minister of Commerce and Industry and Railways Piyush Goyal and UK Secretary of State for International Trade Liz Truss agreed to intensify the work of joint Working Groups through frequent meetings in order to achieve some of the Early Harvest Agreements. The UK government said that the JETCO will pave the way for an "Enhanced Trade Partnership" as the first step on a wider roadmap for a deeper trade partnership, and subject to progress could lead to a future Free Trade Agreement.

India and the UK are committed to a free trade agreement (FTA) and will kick off that process with "Early Harvest Agreements" as a start, the Indian government said following the first-ever virtual India-UK Joint Economic and Trade Committee (JETCO) on Friday. Minister of Commerce and Industry and Railways Piyush Goyal and UK Secretary of State for International Trade Liz Truss agreed to intensify the work of joint Working Groups through frequent meetings in order to achieve some of the Early Harvest Agreements.

The UK government said that the JETCO will pave the way for an "Enhanced Trade Partnership" as the first step on a wider roadmap for a deeper trade partnership, and subject to progress could lead to a future Free Trade Agreement. "My first JETCO with India has been an opportunity to take stock of progress made so far between our countries and look at barriers preventing our trading relationship from reaching its full potential. India is an incredibly important partner for the UK," said Truss.

"As one of the world's largest economies and democracies, it is a powerhouse that will play a major role in shaping the 21st Century. Today we agreed to look in detail at a framework for a deeper relationship. At this stage we want to keep all options on the table, including the possibility of a free trade agreement at some point in the future," she said. Goyal and Truss also plan to meet again in New Delhi in the coming months to follow up on the progress of these new proposed pacts.

"India and the UK are committed to a Free Trade Agreement; Early Harvest Agreements for a start," the Indian High Commission in London said in a Twitter statement in reference to the 14th JETCO meeting. "Towards this Working Groups to intensify efforts, meeting frequently; monthly meetings of MOSs [ministers of state]; Commerce and Industry Minister [Goyal] and Secretary of State at the Department for International Development [Truss] to meet in Autumn 2020 in New Delhi," the statement noted.

According to UK government figures, trade between the UK and India was worth 24 billion pounds last year, and India is now the second-largest investor in the UK economy. It said that the UK's new Global Tariff (UKGT) schedule serves as a "building block" towards an increasingly open trade partnership.

"Assuming all tariffs are levied, the UKGT could boost trade flows by reducing tariffs on Indian exports by up to 40 million pounds per year. Alongside this, UK companies have secured recognition and registration of polyhalite, a multi-nutrient fertiliser mined in the UK, which will enable UK exports and help Indian farmers to increase crop yields while supporting a cleaner, greener and sustainable environment," the UK government said in a statement. Increasing investment in each other's markets is more important than ever as both economies seek to recover from the impact of COVID-19, the statement added.

At Friday's meeting, the UK and India agreed to work towards removing additional barriers, and to work together to ensure both countries maximise the potential of their digital economies including on data regulation and interoperability. As a follow up to the JETCO talks, Minister of State for Commerce and Industry and Civil Aviation Hardeep Singh Puri and his UK counterpart, Ranil Jayawardena, will conduct monthly meetings to intensify the dialogue.

Jayawardena said: "The United Kingdom and India share a strong and enduring bond, strengthened by a modern trading relationship. It's clear from today that there are huge opportunities to deepen our relationship with India. "We want to knock down existing trade barriers, create more good jobs and encourage innovation between two of the greatest democracies in the world. I'm pleased to see our shared ambition in the spotlight today as we boost our trading relationship." "India and the UK are, in PM Modi's own words, an 'unbeatable combination'. That's particularly true when it comes to trade and investment, where there is huge potential to unlock existing barriers to trade. I look forward to further strengthening our ambitious partnership in coming years to deliver jobs and prosperity for both economies," said Sir Philip Barton, UK High Commissioner to India.

The UK-Indian JETCO has been meeting for over 15 years, making it the UK's longest standing meeting of its kind, the British High Commission in New Delhi said. Ahead of Friday's meeting, both sides had identified trade priorities through a Joint Trade Review and shortlisted life sciences, information communications technology (ICT), food and drink, chemicals and services as the five priority areas to address non-tariff barriers to trade during the annual dialogue, being held this year against the backdrop of the coronavirus pandemic.

India-UK Working Groups on Life Science and Health, ICT and Food and Drink – three of the five priority sectors identified in a Joint Trade Review last year – made their recommendations to the ministers this week. The formal segment of the virtual talks was followed by a plenary session led by Puri and Jayawardena, alongside UK Minister of State for Investment Gerry Grimstone who interacted with business leaders including Confederation of Indian Industry (CII) Director-General Chandrajit Banerjee and Co-Chair of the India-UK CEOs' Forum Alay Piramal. "Both sides approaching talks with open minds and commitment for close cooperation for post-Covid economic revival and revitalisation of long-standing trade and economic linkages. Talks will cover wide range of themes for post-Brexit India-UK trade arrangements," noted the Indian High Commission in London. Earlier this month, during India Global Week 2020, Truss had said that her Department for International Trade (DIT) was not "letting the grass grow under our feet" and therefore the dialogue will carry on virtually amid the COVID-19 crisis.

"During the Covid crisis, we have been working with India to keep supply chains open and keeping trading routes alive and as we emerge from Covid, it is vitally important we don't move to protectionism," she said. Later, addressing a separate session, Goyal had reiterated that India remains ready to strike an early post-Brexit deal with the UK with further details to follow later.

"Free trade agreement (FTA) should be our goal, but we can do a PTA [preferential trade agreement] in an immediate future," he said.