The last gasp of the Global Modiwave: the EU-India Trade deal
The EU-India trade deal shows Europe's governing class has learnt no lessons from a decade of unrest
Last week, the President of the European Commission, Ursula von der Leyen, met the Indian Prime Minister Narendra Modi to announce that four years of negotiations between the EU and India had reached their conclusion. A deal now exists between what the EU website calls ‘the world’s two largest democracies’, although at the time of writing the draft text has not been published and ratification has not started. On that website, the European Commission declared the creation of ‘the world’s biggest free trade area’, touting the reduction in tariffs on beer from 110% to 50%, while crowing that tariffs and technical barriers would remain on ‘sensitive products’ such as beef, sugar, rice, and chicken meat. They also secured, on wine and spirits, terms similar to those achieved by Great Britain in her recent deal with India.
At the press conference, however, in the presence of Modi, Frau Leyen had a rather different message. ‘Sri Narendra’, she said, ‘we both know that our greatest wealth is our people… we will facilitate the movement of students, seasonal and highly skilled workers… launching the first EU Legal Gateway Office in India… a one-stop hub to support Indian talent moving to Europe.’ Oh dear, there they go again…
When Western governments ordered lockdowns in 2020, not much thought was given to how they would pay for this luxury policy. Money was borrowed, of course, but a large portion of the costs were met by printing more money than usual. By ‘more’, I mean that there are double the number of US dollars in existence now than there were in 2019. Britain, the Eurozone, Australia, and Canada all acted similarly. One of the few Western countries to show discipline was Switzerland, and it was rewarded by avoiding the inflation which ensued. To counter this inflation, lots of Western governments, even right-wing ones which had pledged the opposite, decided to open their borders. Faced with millions of unemployed youths whom they had locked up for two years, these governments still thought that admitting millions of Third Worlders was the best way to keep a lid on things, flooding the labour market in order to try and push down wages, and hence prices.
India has been a great beneficiary of this policy, at least for now (although Indian Alastair Campbells should be knocking back their bottles of Cobra, terrified about India’s ‘soft power’). Modi’s commitment to mass emigration is often portrayed by the Online Right as an offensive strategy to siphon off massive remittances from wealthier countries and create a huge diaspora to increase Indian diplomatic and political leverage abroad. There is indeed good reason for believing that this is part of Modi’s thinking, but there is also a much more mundane motive for him supporting mass emigration: due to sex-selective abortion and the sheer size of the Indian population, there is a glut of about 1 million Indian men a year graduating into the working age population; in total, something like 25 million Indians turned 21 last year. There is very little chance that the overcrowded Indian economy will be able to satisfactorily absorb all of this labour, and there is absolutely no chance that it will be able to create enough degree-level jobs to absorb all of India’s nominally ‘high-skilled’ university graduates.
As such, with ‘Grok Epic Roast Mode’ squeezing him out of his father’s profession, the Indian looks for the next job which isn’t quite automated yet: working at your local McDonald’s. The Indian Government agrees that, in the circumstances, this is the most sensible thing for him to do, and will lobby internationally for his right to do this. Unfortunately, Western voters leaving house arrest were not best pleased to be confronted by millions of third-world immigrants hanging around Tesco, as reflected in the rise of the so-called ‘far-right’ across Europe and the victory of Donald Trump in the United States. For Modi, who presumably couldn’t believe his luck when the doors opened, this is worrying. The doors might swing shut again. Imagine millions of expats being sent home, crowding once more onto the Mumbai Metro, listless, angry, and the millions of new graduates each year stuck in India, like a hornet in a bottle. In a democracy, such a situation cannot be good for the ruling party.
The doors, then, must be wedged open permanently. India has some of the world’s most ridiculous tariffs. 125% on cars and nuts. 150% on wine. Does the Indian beer industry really need the protection afforded by a 110% tariff? Why not let Heineken sell a bit more beer and spirits, and in return we can get the EU to agree to a ‘mobility deal’? And so Modi set out to use the leverage that the License Raj had gifted him on tariffs to get what he needed.
The question, then, is what the Europeans would get out of such a deal? The obvious answer is ‘more exports’ — but this is questionable. Despite large tariff reductions, this EU-India deal is largely pointless. Firstly, most of the tariffs are merely reduced, rather than eliminated. It does not create a ‘free trade area’ — it reduces Indian tariffs from over 100% (obscene) to about 50% (still very high), and largely excludes their agricultural products, like beef (surprisingly, India is the world’s fifth-biggest beef producer, though this is mostly water buffalo). There is apparently some agreement on services included, but I suspect this will mostly go the other way, much like Britain’s deal with India, which has caused some British accounting firms to lay off their English accountants and to replace them with Indians working from India. EU-India trade is not even that big in the first place: the EU’s own website admits it is only worth about €180 billion a year, although it optimistically claims it will double thanks to the deal. In comparison, EU-US trade is worth €1.68 trillion, nine times as much. The EU trades more with China, Great Britain, Switzerland, and Turkey, exports and imports, than it does with India.
Secondly, for most businesses, tariffs are not the main barrier to trading with India. I’m sure truly huge firms like Heineken will benefit from the tariff reductions because they move huge tanks of liquid through ports of entry, but in my professional experience, Indian customs is so corrupt that any firm sending relatively small shipments there will quickly stop doing it. An anecdote, if you will humour me: at my employer, which is not a small business by any means, Indian customs tried to give us a seven figure ‘fine’, lied about what the duty on our product was (even though you can download the Indian trade tariff for free), and actually arrested our partner in India. He rotted in prison for a week. The result is that my employer now ships to India through a foreign agent who almost certainly bribes Indian customs on our behalf — hence their vague and expensive fees.
It’s bizarre to think that a mere reduction in tariffs would make it worthwhile dealing with Indian customs. If you ever have the pleasure of going to an Indian customs house, you will see signs everywhere saying bribery is illegal, much as a job centre is full of posters about quitting cocaine. Indian X users constantly post horror stories about customs stealing their belongings, demanding ‘fees’ payable only in cash, et cetera. The goods my company was trying to send to India were zero-rated, but it didn’t make any difference. The idea that high tariffs are the main limiting factor on exports to India can only be supported if you have no experience trading with India.
That the Commission agreed to such a deal says a lot about them. At a time when reaction to the global ‘Modiwave’ (as coined by Max Tempers) is at its highest, they have agreed to a deal entrenching further Indian immigration. One may wonder where, exactly, the treaties establishing the European Union give the Commission any power over the migration of third-country nationals. The mobility deal itself has not yet been published, so we have to assume that the Commission cannot force European countries to accept Indian immigrants if they do not want to. Aside from the ‘hub’ in India to help would-be migrants fill out paperwork, I suspect the deal is more symbolic. That is not to say that we shouldn’t expect increased Indian migration to France and Germany in the next few years, perhaps even directly as a result of this deal, but rather that this would be the result of political choices made by national governments, not the imposition of Brussels.
What the EU can (more or less) do, however, is make countries accept immigrants from other member states. Last week, Spanish Prime Minister Pedro Sánchez had a royal decree issued granting settled status to illegal immigrants. It offers a general amnesty to anyone who has resided in Spain for five months and hasn’t committed a serious crime. The Spanish government estimates that this will benefit 500,000 ‘irregular’ migrants, drawn mainly from Latin America (for whom Spain has some truly insane rules for conferring citizenship, requiring just two years of legal, continuous residency) but also from places like Morocco and Algeria, though some sources estimate the numbers will be higher. The numbers themselves are not the point: the problem is that this will simply embolden would-be illegal immigrants, as rational beings who respond to incentives. Everyone can understand that in ten years’ time, the next left-wing government will argue for the same policy. They will point to the imagined ‘success’ of this decree as a precedent.
These immigrants will be given legal status in a Schengen Area country, meaning they will now have the confidence to move around the EU as they see fit. Whereas before a Guatemalan apprehended in Bayonne could expect to be on the next flight back to the capital of Guatemala (or the next small boat at Calais), now they will be able to produce their Spanish papers, and at worst be sent back across the border. Attracted by the better opportunities in France, Germany, the Netherlands, and Northern Italy, those Spanish illegals who speak English will quickly spread out. The only thing a member state could do to stop this would be to suspend the Schengen Agreement, which, while not without precedent, is a rare and grave step to take. It is only a matter of time, of course, before these immigrants (especially those from Latin America) will be given Spanish passports, and any hope of a member state excluding them will be snuffed out forever.
This is not even a new phenomenon. It is widely known that many of the EU nationals who have moved to Great Britain post-Brexit have been Indians or Africans. There is a sizable ‘Dutch’ community in London, consisting mostly of Somalis. What makes this particular incident noteworthy is that it is an explicit amnesty for illegals, distinct from the regular routes of naturalisation available to non-European migrants. It essentially broadcasts to the whole ‘Global South’ that Europe lies open to them, that they will no longer be cooped up in one country but will be issued with documents allowing them to go where they will. There will not even be the pretence of having to claim asylum. It offers a precedent to other left-wing governments within the EU. It might even offer a cynical blueprint to member states at Europe’s frontiers — to Greece, to Italy, to ‘Based Poland’ — that they can issue passports to these unwanted people and quickly shoo them on their way to the gold-paved streets of Germany.
It exposes a real failing in European integration: that while free movement is enforced between states, there is no common external immigration policy. The Customs Union imposes a common external tariff on goods; the Single Market imposes common standards. I suspect many member states would reject a push for common standards on migrants and common rules for naturalisation. Perhaps some compromise could be reached on things like minimum salaries, the exclusion of certain classes of criminals, and a common residency requirement prior to naturalisation, the breaking of which could be punished by suspension from the Single Market; however, it is likely that any such compromise would be more generous than anything a state truly concerned with mass migration could accept. Spanish voters themselves seem quite tolerant of the churn of Latin Americans; the French run-off system makes it virtually impossible for anti-immigration parties to win power; Germany is currently flirting with banning its anti-immigration party. ‘Based’ countries like Denmark and Hungary are not going to be setting the agenda on this, especially once Peter Magyar ousts Viktor Orbán this year (even if Magyar’s migration policies remain largely identical to Orbán’s, as he has promised — indeed, he has promised to close the borders further — he is fundamentally running on the basis that he will pursue a cordial, non-confrontational relationship with European institutions).
Yet in the absence of such an agreement, it is all but impossible for a country to control its own borders within the European Union. It is odd, then, that certain Brits who consider themselves ‘right-wing’ suggest closer relations with the European Union, or even to rejoin it (including within the pages of this very journal). The Commission is grabbing powers beyond the scope of the treaties. It is about to institutionalise Indian immigration in the same way it has institutionalised subsidising French farmers or fining American technology companies. A rogue left-wing member state is admitting half a million illegals into the Schengen Area. No doubt Spanish passports and the right to freedom of movement will follow. This is before we even consider that the EU are banning things even more enthusiastically than Keir’s kill-joy junta.
The New Statesman claimed recently that Sir Keir Starmer could regain the initiative by announcing a snap referendum to rejoin the EU, and that he would probably win. Ignoring Starmer’s ‘reverse Midas touch’, the EU is even easier to attack today than it was ten years ago. It would be a landslide!
The puzzle is why, as opinion in Great Britain and much of the EU shifts rightward, are left-wing governments becoming more intransigent? A cynic might say they are simply wreckers, trying to get as many immigrants in before a feared right-wing triumph, to make the scale of the problem too big to handle. This is incorrect. Left-wing governments do left-wing things because they are left-wing. Pedro Sánchez believes that his policy is not only good for the illegal immigrants, but also good for Spain. Keir Starmer wants to prosecute British soldiers because he thinks it is the right thing to do. Even if the Commission have some reservations about Indian immigration, they obviously believe accepting more of it is worthwhile if they can increase their exports, however marginally.
That the Commission should’ve been so desperate to agree to a deal so disappointing — especially when the price is increased Indian immigration — is quite telling. That a German Commission President should have agreed to it at a time when unemployment in Germany is at a twelve-year high should tell you all you need to know. Like the late, great Margaret Thatcher, Europe’s leaders are happy to accept high unemployment to lower inflation. Unlike her, they are trying to do this with unlimited Third World immigration instead of monetary discipline. They are doubling down on this even as public opinion moves against them.
That Western governments should become more left-wing as right-wing parties soar in the polls suggests something of a siege mentality. As their worldview continues to be embarrassed by world events, the elite have opted for their worldview. Of course, it is no new insight that people will ignore evidence that contradicts their beliefs and emphasise evidence that supports them. As news stories rack up every day of a new boat person raping and murdering, a new female screw screwing an inmate, a new set of poor economic figures, the reasons why these are not true, or at least not really relevant, become attractive. The more crime immigrants commit, the more racism is on the rise. The more lady prison officers embarrass themselves, the more female police officers must be promoted. The more the economy congeals, the more money can be spent on junior doctors and supervised toothbrushing.
Like Hitler waiting in his bunker for Steiner’s heroic counter-offensive, Keir Starmer and his advisers spend every week plotting a new ‘soft relaunch’ of their government. In this context, it makes perfect sense why Keir’s reaction to the rise of Reform would be to suggest rejoining the Customs Union. The future of a Federal Europe, full of socially-housed foreigners happily riding their (or at least somebody’s) bikes to their various hubs, is within our grasp. We just have to reach out and take it.
This article was written by Don Fox, a Pimlico Journal contributor. Have a pitch? Send it to submissions@pimlicojournal.co.uk.
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