Britain’s post-Brexit trade negotiations with India are at risk of being derailed before they have even begun, thanks to a huge split between the two countries on immigration.
Prime Minister Theresa May is in India on an official visit to try and lay the groundwork for a major trade deal between the two nations once the UK has formally left the European Union, but has already hit a brick wall thanks to the Indian government’s tough stance on immigration when it comes to any deal.
Essentially, India’s demand for doing a deal with Britain — as it has been with other countries in the past — is that more Indian citizens must be allowed to work in the country, in return for increasing trade.
Unfortunately for Britain, putting stronger controls on immigration was the biggest reason people voted for Brexit, so any deal that includes extra immigration seems unlikely to be widely accepted.
Basically, there is a fundamental disconnect between the anti-immigration stance of many Brexiteers, and their desire for free trade deals, given that the movement of people is often a key component in trade agreements. This is especially true of India.
India’s Prime Minister Narendra Modi made this point very clear in an appearance with May on Monday morning in India’s capital, New Delhi.
“Education is vital for our students and will define our engagement in a shared future,” Modi said at a technology summit, according to the BBC.
“We must therefore encourage greater mobility and participation of young people in education and research opportunities,” he added, making a thinly veiled criticism of the UK’s policy on student visa, something that has long been a sore spot between the two nations.
British government policy currently requires that international students return to their home country, or at least leave the UK, once they have completed their studies. Since the policy was implemented — during May’s tenure as Home Secretary — the number of Indian students enrolling in British universities has fallen by 50%.
During the same summit, May defended the policy, saying: “We have a visa system for countries outside the European Union which ensures that the brightest and the best are able to come to the United Kingdom.”
“The figures show that we issued more work visas to India than I think the U.S., Australia, Canada and China put together.”
The sticking point on immigration in any deal between the UK and India is something that has been raised previously. Last month, Sir Thomas Harris — a trade expert, who was once the British ambassador to Korea, and is former vice chairman of emerging markets-focused bank Standard Chartered — told a conference in London that Britain’s will really struggle to do a deal with the likes of India.
During his appearance at the Brexit and Global Expansion Summit, Harris said:
“What’s the single biggest Indian demand for their trade deals? The single biggest demand is reciprocal access in the EU markets for a very significantly enhanced Mode 4 arrangement. That is for greater access for skilled and technical staff from India.”
He also used the example of the EU’s attempts to strike a trade deal with India to show just how hard each individual trade deal will be, saying:
“Some Brexiteers suggest that we can do deals with major Commonwealth countries like India. What they fail to understand is that the EU has been in negotiations with India for the last eight years, and has failed to conclude a deal. And what were the sticking points in those negotiations?
“The sticking points were over trade in services — in accountancy, banking, insurance, and legal services — where the UK was the primary EU demandeur. The Indians were not prepared to table a serious offer on trade in services.
“For the life of me, I cannot see why the Indians would be prepared to offer concessions in services in bilateral talks [with the UK] which they were not prepared to offer in return for access to the EU as a whole.”
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