The EFTA (European Free Trade Association) representatives met with Indian officials in May 2023 to talk about restarting talks for a TEPA (Trade and Economic Partnership Agreement). This topic is relevant for the IAS Exam economy and international relations segments.
What is EFTA?
EFTA stands for the European Free Trade Association. It is an intergovernmental organisation that was established in 1960.Â
Image source: www.efta.int
- Currently, EFTA has four member states: Iceland, Liechtenstein, Norway, and Switzerland.Â
- The organization promotes free trade and economic cooperation between its member states and with other countries around the world through the negotiation of free trade agreements.
- Although EFTA states are small, their economies are significant, with goods and services exports and imports worth almost $1.3 trillion (in 2021).Â
- These countries have a highly skilled workforce and are leading the world in industries such as pharmaceuticals, biotechnology, and machinery manufacturing.
- EFTA has a history of negotiating trade agreements that benefit both sides, having established 29 free trade agreements (FTAs) with 40 countries so far.Â
- These FTAs contribute to almost 22% of the total imports of EFTA states.
About Trade and Economic Partnership Agreement (TEPA):
- Trade and Economic Partnership Agreement (TEPA) is a type of trade agreement that aims to promote trade and investment between two or more countries.Â
- It typically covers a wide range of issues related to trade, including the reduction or elimination of tariffs, the removal of non-tariff barriers, and the facilitation of investment and services trade.Â
- The TEPA negotiations between EFTA states (Iceland, Liechtenstein, Norway, Switzerland) and India aim to enhance trade and economic cooperation between the two parties.
EFTA and India
- If Norway, Iceland, Switzerland, Liechtenstein, and India agree to a TEPA, it will benefit everyone involved.Â
- EFTA countries are experts in pharmaceuticals, biotechnology, and machinery manufacturing, while India is known for its economic growth and green technologies.Â
- Together, they could enhance trade, research and development, and innovation, and encourage business collaboration.Â
- The agreement would also help boost India’s export potential to EFTA markets by improving market access for goods.
EFTA States are Partners in India’s Growth Story:
- The countries in EFTA have large investments in different areas such as machinery, banking, pharmaceuticals, electrical engineering and metals.Â
- If they sign a trade agreement, it is expected that they will increase their investments in India.
Mutually Beneficial Relationship for Skilled Labour:
- The skilled labour market is mutually beneficial for EFTA states and India. Around 20,000 Indian professionals contribute to Norway’s high-tech industry, and India is the top non-EU country for work permits issued in Switzerland.Â
- With a trade agreement between EFTA and India, more opportunities for Indian service providers will arise.
Collaboration on Green Growth:
- Collaboration between EFTA states and India on green growth is possible.Â
- India has set a target of meeting 50% of its energy needs with renewable sources by 2030, and EFTA states can provide expertise in cutting-edge technologies such as wind, solar, geothermal power, and hydro to help achieve this goal.
Conclusion:
- A trade agreement between EFTA states and India has the potential to foster a strong partnership and increase trade between democratic partners who share values such as gender equality and promoting sustainable development.
- EFTA states are committed to a swift process towards a balanced agreement with strong political involvement and guidance.
European Free Trade Association (EFTA) [UPSC Notes]:- Download PDF Here
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