FM Nirmala Sitharaman calls EU free trade deal a 'high priority'

Finance minister Nirmala Sitharaman on Tuesday said a free trade deal with the European Union is a "very high priority" and could be sealed by the end of the calendar year, even as she called out the 27-member trade block's Carbon Border Adjustment Tax (CBAM) a mentality "repetition of colonialism".

"A sense of urgency is felt by both sides because the market can be one big market," Sitharaman said at Asian Development Bank's governors seminar on Cross Border Collaboration for Future.

If the negotiations go forward, a December timeline is not impossible to achieve, Sitharaman said. She said that except for one or two items on which each side is fixated, there was a broad agreement to get a deal by year-end.


Her statement assumed significance in the wake of the announcement of the India-United Kingdom free trade deal by prime minister Narendra Modi and British PM Keir Starmer.

She said countries were increasingly looking at bilateral arrangements with uncertainties exacerbating post the April 2 tariff announcement (by the US president Donald Trump) and global institutions not carrying the heft that they did earlier.

Noting that concentration risks had played out, the minister said supply chains cannot be dependent on one big market and there was a need to have market access in different countries. She said the free trade principle, which was seen as an economically prudent solution, had caused "huge disruptions".

However, she said, while there is no going back on globalisation, there is caution on being dependent and countries had increasingly realised that there should at least be some level of "self-reliance".

The minister said India had taken a long-term approach towards supply chains, keeping in mind the country's strategic strengths and making sure its capacities are leveraged.

CBAM
Questioning the "morality" of CBAM, she said the climate doesn't respect borders.

If the collective effort is to get the world greener, then it has to be everywhere, Sitharaman said.

"And so, if some country thinks within my borders, I want it to be greener, so I will deplete others, this kind of mentality I find to be a repetition of colonialism," the minister said, adding that this can no longer be the spirit with which international cooperation and trade can happen.

However, she said, CBAM would not be a deal breaker in the EU-India trade deal talks. "...that need not be a deal breaker. You need to talk and calibrate your position, just as we need to calibrate our position on some other things. Negotiation is about the art of making it possible.

(The reporter is in Milan at the invitation of the ADB)