States may now face impediments when trying to improve technology trade. lobal trade and stronger collaboration between countries play a major role in advancing technology trade and accessibility. The per capita income of India remains on the lower end of the spectrum compared to technological powerhouses like the US and China. The agreement seeks to improve the cross-border flow of technology goods and services between the two entities.
Identifying potential areas of technology collaboration between India and Europe is a key part of the agreement to build on their comparative advantages and address their flaws in certain key technology sectors. The recently announced Europe-India Trade and Technology Council (TTC) Agreement is an attempt to have easier access of key technologies to both actors. Another area of focus would be the existing and potential trade barriers that might impact the agreement. The current geopolitical tension, such as China’s aggressive behaviour during the Covid-19 pandemic and the Russian invasion of Ukraine, has created a shroud of uncertainty for states sharing critical technologies. With increased economic protectionism around the world, the trade of skilled labour for the technology sector will face constraints. In the capital and labour-intensive technology sector, both high-skilled and low-skilled workers are required in different areas of the value chain.
Today, easy movement of labour across countries is a challenge. These barriers need to be addressed if the agreement can yield tangible results for the growth of the technology sector in India and Europe.Efficient trade policies facilitate the cross-border movement of goods and services in a supply chain. With many emerging economies facing dire economic situations due to the Covid-19 pandemic, there is a shortage of skilled workers ready to relocate to another country. Attracting skilled workers from these countries will require additional financial support from the government as well as a favourable investment climate. Globalisation has heightened the potential for both global technology trade and restrictions that can also hamper technology dissemination.
As technology remains a critical factor in advancing countries’ economies, there is also a quest for improving the accessibility of these critical technologies.
FEARS OF WEAPONISATION
These developments can impede industry growth including investments in the high-tech sector and hamper technology trade. They have also raised fears about the use of certain technologies to weaponise their respective militaries. Recent events, including the Covid-19 pandemic and the Russia-Ukraine conflict, have raised geopolitical and geo-economic concerns about critical technology supply chains. These developments can lead to an increase in techno-nationalist tendencies across regions.Fear of weaponising certain critical technologies can also result in tighter investment screening mechanisms.
Financing that might originate from unverified sources and other potential investors might be viewed with increased scepticism.
EXPORT CONTROL MECHANISMS
If India and the EU can prioritise to develop a strategy to circumvent existing bottlenecks, then the agreement can reap huge dividends for both parties. Restructuring import rules and regulations to facilitate such an outcome is the first step.
The Europe-India TTC Agreement is a positive step for the country to integrate itself into the global technology supply chains and improve its bilateral trade relations with the European Union (EU). The government should prioritise unilaterally reducing import tariffs for critical technology components. While there are now financial incentives to set up shop in India, efficient operations require a constant inflow of essential goods at lower prices. Put in place to prevent the excessive exports of dual-use technologies, the Wassenaar Arrangement’s 42 signatories include the US, Japan, Netherlands, and South Korea.
According to the list, export controls on specific technologies have been divided into five categories: materials, software, technical data, and two covering physical commodities. This remains critical especially for a rising technological power like India. But technology trade remains a convoluted road to navigate with many existential roadblocks. The list of products specifies more than 500 technology products and more than 150 types of critical technology manufacturing equipment.Import restrictions can continue to hamper the growth of India’s technology industry and prevent free technology trade. Like nuclear technology, this attaches a component or threat of proliferation, which makes the technology liable to certain export controls. When technologies are used to build defence and military systems, dual-use application applies and can trigger export regulations and restrictions, as per multilateral conventions such as the Wassenaar Arrangement.
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