How EU-India FTA, IMEC are fundamental to saving Europe from Chinese dominance

“Cacio pepe” is a pasta dish that has come to signify typical Roman cuisine over time. It is, however, in its simplicity, the witness of millennial trade between India and Italy, the will and need to connect the Mediterranean with the Red Sea and the Indian Ocean.

Cacio, or pecorino romano, is a cheese that has been traditionally made in the agro romano, the farmland controlled and influenced by Rome. The pepe, or pepper (both longum and nigrium), increased in popularity in Rome around 30 BC, and eventually over 70 per cent of Roman recipes required the use of Indian pepper.

This simple dish stands for the importance of the trade and trade routes between India and Europe (and Italy), which have been strategically important for over 2,000 years.

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The first major change in these trade routes was when Constantinople became the hub for trade between Europe and India, once Egypt fell to Islam. The fall of Constantinople to the Ottomans in 1452 started the race between European powers to find a new route to India.

Vasco da Gama, in 1498, “discovered” a longer route around the Cape of Good Hope, landing again in Kerala, from where the Romans used to load their pepper.

The third change was the actual creation of the Suez Canal, which brought back the Roman route. Only this time were the Mediterranean and the Red Sea finally connected, rather than shipping goods to Alexandria by land and barge from Berenice.

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The persistence with which Europe has pursued its links with India, eventually leading to European colonisation of India and the Indo-Pacific, has demonstrated the importance of the Europe-India trade routes.

The India-Middle East-Europe Economic Corridor (IMEC), launched during the G20 in New Delhi in September 2023, only tried to politically secure this trade route by including countries that the United States-New Delhi partnership viewed as politically safe and strategic.

In one direction, this was an extension of the I2U2, the West Asian Quad, a loose supply chain resilience and trade alliance between the US, UAE, India, and Israel. Securing the trade lanes from Europe and the Middle East to India automatically increased supply chain resilience in the Indo-Pacific and ASEAN.

Ships today deliver crude from the UAE and Saudi Arabia to India’s west coast ports, which have important refineries. A future extension of the IMEC could see refined products supplied by pipeline to India’s ports on the east coast and Bay of Bengal to supply countries in South and Southeast Asia.

Eventually, not only will IMEC reduce the time and cost of transporting goods and increase connectivity (cables and pipelines) between Europe, the Middle East, and India, but it will also make India the hub for supplying South and Southeast Asia, insulating them from China’s trade aggression.

IMEC disrupted trade between India and Europe again and continues to be a priority for all governments involved, including France, the UAE, Saudi Arabia, India, and the United States.

Italy, which is a founding signatory of the IMEC MoU, Rome, whose typical dish is the mascot of the Europe-India trade, still has to make a move. France has appointed a IMEC special envoy in February 2024; the UAE-India framework for the IMEC has been signed in the same month; and Saudi Arabia has kept discussing normalisation with Israel despite the Israel-Hamas conflict. The European Union and Italy have not yet made a move.

During this period of silence from the EU, another important development occurred that was largely ignored in Europe. The European Free Trade Association (EFTA)-India Trade and Economic Partnership Agreement (TEPA). The EFTA is composed of four countries: Switzerland, Liechtenstein, Iceland, and Norway, which constitute the European Economic Community but not the European Union.

The EFTA-India TEPA, signed after a 15 year negotiation, not only promises $100 billion in investment into India from these countries but also reduces duty on over 90 per cent of products exported between both sides.

For Italian exports to India, especially from northern Italy, this could be of great advantage for the private sector, but would weaken Italy’s own contribution. It would encourage Italian businesses to open a “final mile” in Swiss free zones, as products such as coffee, machinery, and technology with a Swiss certificate of origin would attract much reduced or waived duty in India.

The TEPA makes Swiss equipment competitive with Chinese equipment in several cases in India due to customs duty reduction or elimination. To maintain this advantage, the EFTA states will invest $100 billion in India in the next 15 years, creating over 1 million jobs. While the EFTA managed to conclude its free trade agreement, the European Union-India FTA still languishes, creating a huge disadvantage for Italian and European companies.

The EU-India FTA is fundamental for the final success of the IMEC, as is Italy’s role as the final destination of the IMEC from Haifa. If Italy is able to negotiate Taranto and Trieste as the two final terminals of IMEC into Europe, it will develop the future of Taranto’s port, which was recently abandoned by China, and reestablish Trieste as the gateway to northern and eastern Europe.

IMEC is not just connectivity or a trade route; it is the future-proofing of Europe, the Middle East, and India’s connectivity, energy, and supply chain resilience from a list of enemies, from China to the Muslim Brotherhood.

History has taught us that religion, politics, and trade are intertwined, and for the Italy-India trade story to triumph again, the success of both the trade route (IMEC) and the EU-India free trade agreement is essential. Sometimes politics is as simple as “cacio-pepe”.

The author is an Indo-Italian entrepreneur and has over 24 years of leadership and entrepreneurial experience across a wide range of disciplines including pharmaceuticals, technology, renewable energy, strategic consulting, not-for-profit and development in over 30 countries. He is also the founder of the Dialogue on Democracy. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.