LONDON — U.K. Prime Minister Keir Starmer has hailed a “major win” as he prepares to sign a long-desired free trade agreement with India. But with key aspects of the deal still unresolved, he may want to keep the champagne on ice.
Running to 2,000-plus pages, Indian and British lawyers were still plowing through the text on Wednesday ahead of a signing ceremony on Thursday overseen by Starmer and India’s Prime Minister Narendra Modi, who is in London for a visit.
The final deal — which the government estimates will boost U.K. GDP by £4.8 billion each year in the long-run — will see Indian tariffs on British goods slashed from 15 percent to 3 percent on average.
Significantly, tariffs on whisky will be cut in half from 150 percent to 75 percent, with a further drop to 40 percent over the next decade. Tariffs of up to 110 percent on British automotives will drop to 10 percent under a new quota.
In a statement ahead of the signing, Starmer described the deal as a “major win for Britain,” creating “thousands of British jobs across the U.K.” Others will be in a less celebratory mood as they await answers on key issues.
Missing pieces
In its announcement on the deal, the government confirmed that it was still negotiating a Double Contributions Convention.
The controversial side agreement would mean that neither Indian nor British workers would be required to pay national insurance contributions in both their home country and the one they are working in.
This has been a major source of contention among the U.K.’s right-leaning political parties concerned about immigration.
Instead of unveiling the agreement on Thursday, both sides will sign a letter that commits them to finalizing the text in the coming months so that it can come into force at the same time as the trade deal. A letter containing the core details will be published Thursday.
Meanwhile, efforts have been foiled to secure a Bilateral Investment Treaty, a pact that would give firms the right to sue governments over policy changes they claim would harm their investments, through a mechanism known as an Investor-State Dispute Settlement (ISDS).
Negotiators had hoped to get the deal over the line to coincide with the free trade agreement. However, talks have been hampered by legal questions over a sunset clause which is still in effect from their previous investment treaty. The U.K. government argues it couldn’t find a landing zone that worked for British firms, but is continuing negotiations.
Next steps
Alongside the trade deal, the U.K. and India have also unveiled a raft of new investments, totaling almost £6 billion. These include a £30 million joint investment by the British aerospace firm Rolls-Royce and India’s Hindustan Aeronautics Limited to expand their manufacturing plant in Hosur, India.
“The almost £6 billion in new investment and export wins announced today will deliver thousands of jobs and shows the strength of our partnership with India as we ensure the U.K. is the best place in the world to invest and do business,” Trade Secretary Jonathan Reynolds said.
In addition, the U.K. and India have signed a renewed Comprehensive and Strategic Partnership, which will see closer collaboration on defense, education, climate, technology and innovation. Both sides also agreed to step up cooperation to tackle corruption, serious fraud, organized crime and irregular migration.
The government said it would now prepare for the trade agreement to be ratified by parliament.
Thursday’s signing kick-starts a process that will see the text of the deal published around midday and then reviewed by Britain’s agricultural trade watchdog, the Trade and Agriculture Commission over the coming months, before parliament returns in the autumn to scrutinize the deal.
