Sam Bidwell is a Parliamentary Researcher, and Director of the Centre for Commonwealth Affairs.
Post-Brexit Britain is learning the hard way that its starry-eyed commitment to free trade is by no means global orthodoxy.
With the work of rolling over our EU deals mostly done, Kemi Badenoch’s shiny, new Department for Business and Trade has turned its collective mind to striking a deal with India. The appeal is clear – a proverbial trading jewel in the proverbial Brexit crown: a comprehensive deal which would have been impossible within the rubric of bureaucratic Brussels.
In reality, the picture hasn’t been so rosy. A lack of trust and a tense historical relationship have marred the negotiations from day one. There is a sense that London needs an Indian deal to validate its vision of a Global Britain, while confident, assertive India, with its team of hardened experts, sees this as more of an opportunity for a victory lap.
Delhi’s team has demanded relaxed Visa rules and, most recently, the restitution of historical artefacts. This comes just weeks after talks were paused in the wake of Sikh nationalist protests outside of the Indian High Commission in London. This shouldn’t surprise us: Modi has a track record of complicating the modern Anglo-Indian relationship with talk of the past.
The economic picture is equally complicated. India has historically been – and in many ways remains – one of the world’s great protectionist nations. While the 20th century heyday of the ‘License Raj’ is over, the country maintains an eye-watering 13.8 per cent average tariff rate, compared with the EU’s six per cent and New Zealand’s two per cent. The US Trade Department describes Indian policy as “opaque, unpredictable”, often leaving firms “drowning in paperwork”. Ouch.
Add to the mix the fact that India has a vanishingly small number of existing free trade agreements beyond its immediate neighbourhood, and it soon becomes clear that the goodwill which characterised FTAs with Australia and New Zealand is nowhere to be found on Race Course Road.
Despite all of this, Britain’s eagerness for a deal leaves us at risk of accepting whatever Delhi puts in front of us. Leadership hopeful Badenoch might find herself unable to resist the pull of a headline-grabbing India deal, and backbench Brexiteers are eager to prove the UK’s ability to stand on its own two feet.
However, a note of caution. Britain should not sell its soul for a deal with India – if Delhi won’t budge on Visas or the restoration of colonial treasures, the British team must be willing to walk away. Failing to do so would be disastrous.
The best-case scenario of a deal done hastily sees a naïve Britain taken for a ride by Delhi’s hardened negotiating team, who extract various concessions by cleverly agreeing to ‘drop’ their bolder demands. A deal which is seen to be bad for Britain will bruise Brexiteer confidence, and give credence to those who said that we were better off relying on the Brussels safety net.
In the worst case, the Government humiliates itself by caving on those demands, opening the floodgates for a whole host of complicated discussions around restitution, reparations, and relocation. As Modi consciously positions India as the leader of the “Global South”, the prospect of reparations becoming an established bargaining chip in trade negotiations should terrify Whitehall.
It would be dangerous to poison this Government’s timely attempts to re-engage with he Commonwealth with a sense that Britain is willing to empty its archives for quick cash. No symbolic Brexit victory is worth turning London into the world’s biggest post-colonial Cash-For-Gold scheme.
Badenoch and her team should revaluate their approach, even if it means having to weather a short-term political storm. The long-term damage of putting pen-to-paper on a deal that compromises on sovereignty is a far greater threat than a handful of grumbling Eurosceptics.
What we have is already working well. The Indian firm Tata is the UK’s largest private sector employer, and the UK is already the fifth biggest source of FDI for the Indian market. Trade continues to increase year on year. While a comprehensive deal would be nice, it isn’t a necessity.
Instead, the Government should focus on a few narrow areas of sector-specific cooperation– mutual recognition of professional qualifications, reduction of tariffs on luxury goods, and more certainty for investors. These are achievable, in the mutual interest of both parties, and would unlock a number of hitherto untapped economic opportunities.
While not as eye-catching as a comprehensive FTA, a limited approach would lay the groundwork for measured, gradual alignment, while making clear that Britain can afford to walk away from the table.
Humbler foundations may one day blossom into a fully formed, comprehensive deal. In the meantime, the Government should take a more mature look at its relationship with Modi’s India, building trust before diving headfirst into the weeds of comprehensive free trade. Sometimes, less can be more.