2 hours ago
4
For the European Commission president, Ursula von der Leyen, the EU’s trade pact with India was the “mother of all deals”. Seen from the other end of the telescope, it looked like the mouse of all deals, with just €4bn (£3.5bn) in tariff reductions – a rounding error in a €180bn trading relationship. But that misses the point: this is about economic heavyweights resetting the terms of their cooperation because of Donald Trump’s use of tariffs as a tool of economic and political compulsion.
Last week marked a turning point. In upgrading ties with Vietnam in the wake of its India deal, Europe is no longer trying to lock Asian partners into fixed industrial roles. The EU wants Hanoi to move into hi-tech production. That shift will probably displace Vietnam’s labour-intensive manufacturing elsewhere. India is an obvious beneficiary, able to absorb that demand.
Delhi says it will give the EU unprecedented access in politically sensitive areas, most notably vehicle imports, while quotas and phase-ins protect India’s domestic strategy. Europe sees goods exports to India double by 2032. The EU, in return, opens its market widely to Indian exports, especially textiles, without making any onerous demands. Notably the deal helps Indian firms adopt and deploy advanced European technologies.
The EU deepens trade while letting both sides keep their geopolitical room to manoeuvre. For India, that means Europe turning a blind eye to continued Indian purchases of Russian oil – keeping alive a pragmatism born of the energy shock after Russia’s invasion of Ukraine. For Vietnam, Europe doesn’t ask it to choose sides over its trading relationship with Beijing. Contrast this with the US under Mr Trump: India has been threatened with tariffs because it dared to retain its historical links to Russia; Vietnam with “reciprocal” levies and transhipment crackdowns because of its Chinese links. The US treats trade as a weapon: signalling dominance but corroding trust. On the other hand the EU treats trade as a way to share growth without demanding submission. Europe, importantly, can no longer coerce partners; but it also knows coercion backfires.
What Brussels seems to be building is trade as architecture: a way of organising development paths across Asia, encouraging Vietnam to move up the value chain, allowing India to scale manufacturing and anchoring both to Europe without demanding fealty. Set beside the EU’s deals with India and Vietnam, Britain’s tentative rapprochement with China looks far more shallow. The new UK-China relationship is not nothing but it is hardly transformative compared with the EU’s Asian deals.
The bloc’s moves echo the Canadian prime minister Mark Carney’s argument that middle powers can build resilience through interdependence without surrendering autonomy. As the economist Ha-Joon Chang has pointed out, rich countries grew through protection, strategic trade and state support; only to later insist that poorer countries prosper through openness alone. This was the ladder the wealthy world climbed and then kicked away.
The EU’s trade shift matters because it acknowledges that history. For decades, EU trade in Asia was built around one-way access and managed dependency. By encouraging industrial upgrading in Vietnam and tolerating selective protection in India, Europe is no longer freezing late developers into low-value roles. This is not generosity. It is realism. Europe still supplies capital goods, standards and demand. But development requires policy space – and arrangements that deny it have failed.
