India-EU trade pact triggers alarm bells in Washington
Washington, Jan 29 (IANS/WISHAVWARTA) Washington reacted with unease after India and the European Union sealed a landmark free trade agreement, with influential lawmakers, top administration officials, and policy experts warning that America risks being sidelined.
With this trade deal, New Delhi and Brussels will reshape global trade and strategic alignments, they feared.
Senator Mark Kelly said the deal reflects growing frustration among US allies with Washington’s trade approach. “The EU has signed a trade and security deal with India. Canada and the UK are negotiating with China,” the Arizona Democrat said in a post on X.
“This is happening because Donald Trump has alienated our allies,” Kelly said. He warned that such moves carry costs for the United States. “These arrangements our allies are making with other countries have an effect on us, and it isn’t good,” he said.
The India-EU agreement was announced this week in New Delhi. Leaders on both sides have described it as the largest trade pact in India’s history. European Commission President Ursula von der Leyen called it “the mother of all deals.”
She said the pact creates “a free-trade zone of 2 billion people, with both sides set to benefit.” The agreement links two of the world’s largest economies at a time of global trade tensions and geopolitical uncertainty.
Senior Trump administration officials also voiced frustration with Europe’s move. Treasury Secretary Scott Bessent criticised the EU for refusing to align with Washington on tariffs.
“They should do what’s best for themselves,” Bessent told CNBC in an interview. “But I will tell you, I found, I find the Europeans very disappointing.” He added, “They were unwilling to join us (on higher tariffs) & it turns out they wanted to do this trade deal.”
In Washington, policy experts said the agreement should be a warning for the US trade strategy. The Information Technology and Innovation Foundation said the deal shows how other major economies are moving ahead while the United States falls behind.
“The European Union and India’s free trade agreement should be a wake-up call in Washington,” said Rodrigo Balbontin, associate director for trade, intellectual property, and digital technology governance at ITIF. He said the United States is being left “on the sidelines” as other countries cut tariffs and set new trade rules.
Balbontin said the deal has shortcomings. “Several European digital regulations, particularly the Digital Markets Act, are discriminatory to multinational companies,” he said. He also said that India remains “one of the world’s most challenging major economies for intellectual property protection and enforcement.”
Still, he said the pact could have indirect benefits for Washington. “If this agreement helps reduce behind-the-border barriers, it could ultimately benefit the United States,” Balbontin said, as the Trump administration seeks new trade deals.
ITIF said it welcomed closer economic ties between India and the EU. “In a changing global trade system marked by rising protectionism, ITIF welcomes a free trade agreement between two large democracies,” Balbontin said.
He stressed that “the defining challenge of this century is China’s mercantilism.”
Other trade experts urged caution in judging the deal’s impact. Mark Linscott, a former US trade official, called the agreement a major diplomatic achievement but warned against exaggeration.
“There should be no doubt that the India–European Union free trade agreement warrants attention,” Linscott wrote for the Atlantic Council. He said it is “unlikely to transform global trade or economic growth.”
Linscott said many benefits will emerge slowly through phased tariff cuts and regulatory certainty. He said sensitive issues were deferred for later talks, including agriculture, intellectual property rights, and the EU’s Carbon Border Adjustment Mechanism.
He also noted that the deal still requires domestic approvals. At the EU, that includes consent from member states and the European Parliament.
From Washington’s perspective, Linscott said the pact need not damage US trade ties. “There is no reason it should undermine the US trade relationships with either the EU or India,” he wrote. He said it could even spur momentum toward a US-India trade deal.
India and the EU first began negotiating a trade pact in 2007. Talks stalled for years over tariffs, market access, and regulations. Negotiations resumed in 2021.
Together, India and the EU account for more than a fifth of global economic output. The full impact of the agreement will take time to emerge. However, the reaction in Washington shows growing concern that, as partners move forward, the United States may need to rethink its trade strategy.
