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Going by the space allotted to different subjects in the joint statement issued at the end of the eighth India-EU summit held in New Delhi last week, bilateral trade and investment issues do not seem as important as made out to be. Just about two paragraphs of the 37 in the statement focus on trade and investment issues while as many as 12 deal with subjects like nuclear non-proliferation (including weapons of mass destruction), environment and climate change. Even so, t here is little doubt that trade and investment form a crucial part of the bilateral relationship; while the 27-member EU is India’s foremost trading partner (receiving nearly a fifth of India’s total foreign trade) and its biggest foreign-direct investor, India is the EU’s ninth biggest trading partner, having overtaken Brazil and Canada in 2006.

It is thus hardly surprising that the focus of the summit was on expanding the trade and investment exchange, the target being the signing of a comprehensive trade and investment agreement between the two sides. The Prime Minister, Dr Manmohan Singh, has said specifically that New Delhi would like the agreement to be in place before the end of next year.But the road ahead for negotiations will not be easy because of the need to protect the interests of domestic farming and industrial lobbies on both sides. These lobbies are powerful enough to scupper accords being framed at the multilateral level, which only means they will have a large presence at the bilateral level too. In fact, the Union Commerce Minister, Mr Kamal Nath, has pointed out that issues such as farm subsidies could pose a difficult problem, given the prickly negotiations at the World Trade Organisation. As he has emphasised, the interests of Indian subsistence farmers are non-negotiable, a stance that could raise the hackles of the EU farming community which already enjoys a troublesome export subsidy. Services is one sector where India could make deep inroads in the EU economies, which could however become problematic for Brussels beyond a point. This is perhaps why the ongoing discussions on a “sensitive list” are so important, the EU Trade Commissioner, Mr Peter Mandelson, having warned that “content” should take precedence over deadline.

The Commerce Minister has rightly said that calling a trade accord with the EU a “free-trade agreement” is a “misnomer” because, as experience has shown, trade between “unequal” parties — in terms of economic clout — cannot be totally free if both are to derive equitable advantages. Perhaps, despite pressure from Brussels to the contrary, the objective should be to forge a “controlled” trade and investment accord, which would not only add momentum to the forces operating on the trade and investment fronts (with encouraging results) but also chalk out new areas to promote an exchange with equally promising prospects.

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