The economic center of the world is moving eastwards, said Bjarni Benediktsson, foreign minister of Iceland, who was in New Delhi for the signing of the India-EFTA free trade agreement.
"It was deeply rooted in the middle of Europe not so long ago, but it's moving fast towards the east, which poses some threats to the European economies as their proportional or compact competitive advantage is decreasing, but it is a following change. There are also a lot of new opportunities that are opening, so I'd just like to say that the market principles that have helped us create prosperity in the West until now will also be helpful during this process," Benediktsson said while referring to the growing importance of the East in the world economic order.
In an exclusive interaction with Outlook Business, he extensively spoke on the various issues that include the India-EFTA agreement, Europe's concerns over growing protectionism, the role of the WTO, VISA, and ongoing negotiations of free trade agreement (FTA) talks going on between India and Britain.
After 16 years of negotiations, which started in January 2008, India made its entry into Europe via its first FTA deal with the four-nation European bloc (EFTA) on March 10.
The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland.
The agreement has 14 chapters, including trade in goods, rules of origin, intellectual property rights (IPRs), trade in services, investment promotion and cooperation, government procurement, technical barriers to trade, and trade facilitation. India has received an investment commitment of $100 billion in the next 15 years.
The agreement offers opportunities for increased business in goods and services, including operations in energy sectors like geothermal and hydro. Cooperation extends to tourism and visa processing, aiming to enhance cultural relations between Iceland and India, Benediktsson said.
Benediktsson batted for the open market and lashed out at protectionism, saying that concerns have arisen in Europe about the growing protectionism in the world. He gave examples of the Inflation Reduction Act of the US, China, and Russia. All these acts intend to promote domestic manufacturing, and reduce reliance on international trade.
He said, "The world is moving backward a little bit more towards nationalism and increased protectionism, which is abating the growth of the future. That's why I especially welcome an open free trade agreement like the one that these democracies now concluded because it sends a signal of hope and belief, and it promotes further open cooperation, lowering of tariffs instead of increased tariffs and more protections."
"Especially, I welcome the open approach that India offers in this FTA because it is offering an opening of a market instead of the increased protectionism that we have seen in other parts of the world, he said.
Under free trade pacts, trading partners will significantly reduce duties on the maximum number of goods traded between them, besides easing norms to promote trade in services and investments and opening up the markets.
In a changing economic system, the need to diversify the supply chain has emerged as a necessity. Benediktsson termed it a "huge economic security issue," adding that it should not be undermined. He said, "It opens up opportunities for new businesses to take place. So, supply chains will be diversified."
EFTA has signed about 30 trade agreements with some 40 countries and territories outside the EU so far, while India has made about 14 free trade agreements, including the most recent one.
Talking about the role of the WTO, he said that the significance of the organisation has diminished. The WTO has, over time, probably grown a little less important. While it had a leading role at one point in time, it has now diminished. That does not mean that we should not put efforts into revitalising the organisation."
Benediktsson also looks enthusiastic about the ongoing talks regarding the India-Britain FTA. According to the reports, the India-UK deal is likely to be finalised after the upcoming lower house (Lok Sabha) elections in India. He said, "The economic opportunities are enormous, and if the UK would conclude an FTA with India, I would welcome it and would not look at that as a decreased competition opportunity."
