South Asia

Asia is the world’s largest and most populous continent, of great geostrategic importance to the EU. The EU is forging closer ties with countries in South Asia. India is now a strategic partner of the EU. The EU has security concerns in the region, such as the Kashmir conflict and Afghanistan. The EU is a strong economic player and major development and aid donor, working to foster institution-building, democracy, good governance and human rights.

This Fact Sheet describes the South Asia region. See also the Fact Sheets on East Asia (6.6.8) and Southeast Asia (6.6.9).

Legal basis

  • Title V (EU external action) of the Treaty on European Union (TEU);
  • Articles 206-207 (trade) and 216-219 (international agreements) of the Treaty on the Functioning of the European Union (TFEU);
  • Partnership and Cooperation Agreements (PCAs) (bilateral relations).

South Asia

The EU encourages regional integration and supports the South Asian Association for Regional Cooperation (SAARC). The member countries of the SAARC are Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. The EU, China, Iran, Japan, South Korea, Mauritius, Burma/Myanmar and the US have observer status to the SAARC. The EU is the SAARC’s top trading partner. EU-SAARC trade is worth EUR 112 billion (2016); the EU accounts for around 15% of the SAARC’s overall trade with the world and 22% of its export market (2015).

Development cooperation between the EU and the countries of South Asia covers financial and technical aid as well as economic cooperation. Priorities include regional stability, poverty alleviation, human rights, sustainable development, good governance and labour rights. EU-SAARC cooperation seeks to promote the harmonisation of standards and the facilitation of trade and to raise awareness of the benefits of regional cooperation.

a.India

In 2004, the EU upgraded its relationship with India, the world’s fastest-growing economy, to a strategic partnership covering political, trade and economic cooperation. The 13th EU-India Summit in 2016 defined a common roadmap, the EU-India Agenda for Action 2020, which will strengthen the partnership in the next five years. The EU is India’s top trading partner with a 13.5% share of its overall trade in goods. Total trade, including services, exceeded EUR 100 billion in 2015, standing at EUR 275 million per day. The two-way trade in goods between the EU and India is estimated at over EUR 77 billion in 2016, with a hefty surplus of EUR 1.5 billion in India’s favour. The EU is also one of India’s most important sources of investment, with EUR 51 billion in outward stocks and EUR 16 billion in inward stocks in 2015. India currently benefits from unilateral preferential tariffs under the EU Generalised Scheme of Preferences (GSP).

The EU is an important donor of development aid to India through thematic and regional cooperation. The cooperation covers a broad variety of issues but is strategically focused on business opportunities, energy security, research and innovation, higher education and skills development.

Despite India’s remarkable economic growth, nearly 30% of its population live in poverty. The EP has passed resolutions addressing human rights issues, in particular violence against women and children, and child labour.

b.Sri Lanka

The end in 2009 of the 26-year war between the government and the Tamils promoted strong economic growth. The surprise victory of Maithripala Sirisena in the January 2015 presidential elections ended President Rajapaksa’s decade in power and enhanced cooperation with the EU.

The current legal framework for relations is based on the Cooperation Agreement signed in 1995. On 19 May 2017, the EU granted Sri Lanka readmission to the GSP+ trade preferences on condition that it advance human and labour rights. The EU had suspended GSP+ preferences because of the previous government’s serious shortcomings in implementing the UN human rights conventions.

The European Parliament voted on 27 April 2017 to defeat a motion to deny granting GSP+ for Sri Lanka. The EU is the largest export market for Sri Lanka and its second-largest trading partner. Two-way trade in goods between the EU and Sri Lanka is estimated at EUR 4 billion for 2016. The EU’s assistance to Sri Lanka for the period 2014-2020 amounts to EUR 760 million, focused mainly on rural development. Sri Lanka has made further progress with the reform of its fisheries governance system and met its international obligations in April 2016 with a legal framework for fighting Illegal, Unreported and Unregulated (IUU) fishing.

c.Pakistan

The EU-Pakistan relationship is anchored in the 2004 Cooperation Agreement. The five-year EU-Pakistan Engagement Plan of 2012 provides a framework for upgrading bilateral political relations The EU-Pakistan Strategic Dialogue is currently working on a new, enhanced EU-Pakistan Strategic Engagement Plan which should be finalised by mid-2017 and later renewed, depending on the progress achieved in areas such as human rights, democracy, the rule of law and good governance.

The political stability of Pakistan, a nuclear power, will depend on the distribution of power between the civilian administration, the military and the judiciary, as well as on Prime Minister Nawaz Sharif’s reforms designed to strengthen the rule of law and good governance, together with economic reforms and privatisation programmes. Since 2016, revelations in the ‘Panama papers’ concerning the Sharif family have weakened the government.

The security situation is a source of instability and the Pakistani army is still involved in the politics of the country, particularly with regard to security, defence and foreign policy, with a large counterterrorism mandate.

EP resolutions have addressed the main human rights concerns, which are the suspension of the moratorium on the death penalty, the effects of the blasphemy law, the situation of ethnic and religious minorities, and the establishment of special military courts to try civilians accused of terrorism.

Pakistan is a major beneficiary of the EU’s unilateral trade preferences, under the GSP+ component of the General System of Preferences (GSP) scheme. The EU is one of Pakistan’s top trading partners, with trade worth a total of EUR 11.6 billion in 2016 and the EU taking over 20% of Pakistan’s total exports. Pakistan enjoys a hefty EUR 1 billion trade surplus with the EU. The EU is a significant donor of development assistance and humanitarian aid to Pakistan. Funding under the Development Cooperation Instrument for 2014-2020 amounts to EUR 653 million and is focused on rural development, education and good governance, human rights and the rule of law.

d.Afghanistan

Afghanistan completed its first democratic transition in September 2014, when Ashraf Ghani was sworn in as president. The outcome of the presidential elections caused a serious institutional crisis and the president’s political rival, Abdullah, was appointed ‘government CEO’. Lengthy negotiations delayed the formation of a full cabinet. The International Security Assistance Force (ISAF) withdrew in December 2014, but some 13 000 US and NATO troops remain. The Taliban — and, more recently, the so-called Islamic State (IS) group — pose serious security challenges. Afghanistan is in danger of becoming a ‘failed state’. Greater regional cooperation would be an important driver of national and regional stability.

After the fall of the Taliban regime in 2001, the EU opened a delegation in Kabul. The EU Ambassador is also the EU Special Representative. The current partnership is guided by the Joint Political Declaration of 2005 and the 2014 EU Strategy for Afghanistan. The Council adopted a follow-up to the report on the EU Afghanistan Strategy 2014-2016 in its conclusions on Afghanistan of 18 July 2016. The second Afghanistan-EU Human Rights Dialogue in Kabul on 1 June 2016 underlined the Afghan Government’s continued commitment to improve the human rights situation. Afghanistan is the largest recipient of EU development funding. The current EU budget allocates EUR 1.4 billion to Afghanistan for the 2014-2020 period, with a focus on agriculture, rural development, health, the rule of law, policing, democratisation and accountability. Some 20% of the funds are reserved for ‘incentive payments’ tied to reforms.

The EP has firmly supported the EU-Afghanistan Cooperation Agreement for Partnership and Development (CAPD), calling in a resolution of June 2013 for it to be concluded as swiftly as possible. The CAPD was signed on 18 February 2017.

The Brussels Ministerial Conference on Afghanistan hosted by the EU on 5 October 2016 was a success. It gathered together 75 countries and 26 international organisations which endorsed the Afghan government’s reform agenda and pledged EUR 13.6 billion. The EU and its Member States committed EUR 5 million.

In November 2015, the EP expressed serious concern at the growing insurgency and at the Taliban’s actions against minorities such as the Shia Hazaras. Afghan nationals made up the second-largest contingent of refugees arriving in the EU during the ‘big wave’ of 2015 and 2016. The EU is also providing support for the large numbers of returnees going back to Afghanistan from Pakistan and Iran since 2016. The EU mission supporting the building of an Afghan civilian police (EUPOL), which was set up in 2007, was closed at the end of 2016.

The EU was Afghanistan’s fourth-largest trading partner, after Pakistan, India and the US, in 2015. Afghanistan benefits from the Everything But Arms (EBA) trading arrangement with the EU.

Jorge Soutullo / Anna Saarela / Fernando Garcés de los Fayos

06/2017