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

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 Asian Association for Regional Cooperation (SAARC)  

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, Myanmar and the US have observer status with the SAARC.

The EU is the SAARC’s top trading partner to the tune of EUR 112 billion (2016 figures); it accounts for around 15% of the SAARC’s overall trade with the world and 22% of its export market (2015 figures). 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

The EU-India strategic partnership promotes trade and economic cooperation. Each partner has regions that differ vastly in terms of economic strength, language and culture, a very large market, and a geostrategic position that poses security policy concerns. The European Parliament resolution of 13 September 2017 on EU political relations with India[1] recommended the preparation of a new, consistent EU strategy for relations with India, with clear priorities. The new strategy is being prepared and should further strengthen the EU’s evolving relationship with India by renewing the commitment of both sides to a common response to global environmental, economic and security challenges and re-asserting the EU’s status as a fully-fledged partner.

The 14th EU-India Summit took place on 6 October 2017 in Delhi. The Summit’s joint statement reaffirmed the parties’ shared commitment to strengthening the EU-India strategic partnership, and discussed foreign and security policy, migration, trade, climate, research and innovation. India has huge potential for economic growth and as a major international strategic player. India is carrying out political and economic reforms focused on modernising the administration, good governance, fighting corruption with demonetisation and transparency programmes, tackling social problems, developing the economy with the ‘Make in India’ and ‘Invest India’ initiatives, and imposing a nationwide goods and services tax.

The EU-India Agenda for Action 2020, adopted at the 2016 summit, sets up forums for foreign policy and security consultations. India is a nuclear power, like its neighbours Pakistan and China, and faces security problems, terrorism and armed border clashes, particularly with Pakistan in the autonomous state of Jammu and Kashmir.

India’s caste system is one of the world’s oldest forms of social class organisation, which raises concerns about continued discrimination on grounds of caste. The country is also an ethnic and linguistic mosaic, with tensions in a number of states and reports of human rights abuses and violations of women’s rights.

The EU and India are re-engaging in discussions on how to proceed with negotiations on an FTA, also known as a Broad-based Trade and Investment Agreement (BTIA). The EU is India’s top trading partner, with a 13% share of its overall trade in goods in 2017. The two-way trade in goods between the EU and India is estimated at EUR 86 billion in 2017, with a hefty surplus of EUR 2.5 billion in India’s favour. The EU is also one of India’s most important sources of investment, with EUR 73 billion in outward stocks and EUR 5 billion in inward stocks in 2016. India currently benefits from unilateral preferential tariffs under the EU Generalised Scheme of Preferences (GSP) which links unilateral trade preferences to respect for human and labour rights.

B. Pakistan

EU-Pakistan relations date back to the first agreement between the two in 1962, and are now based on the 2004 Cooperation Agreement. The EU is a strong economic partner of Pakistan and a major development and aid donor, fostering democracy and institution-building in the country.

Pakistan, a nuclear power, plays a strategic role in South Asia. Its political stability depends on the balance of power between the civilian administration, the military and the judiciary. Former Prime Minister Nawaz Sharif resigned in July 2017 after he was disqualified by Pakistan’s Supreme Court following revelations in the ‘Panama Papers’ case. Shahid Khaqan Abbasi, Prime Minister from 1 August 2017 until 31 May 2018, continued the economic reform and privatisation programmes, as well as those to improve the rule of law and good governance in Pakistan. The next general elections are scheduled for 25 July 2018.

The poor security situation is a source of instability, and the army is still involved in the country’s politics, particularly with regard to security, defence and foreign policy, with a broad counter-terrorism mandate.

Pakistan’s international relations are conditioned by fear of war with India over Kashmir, by US military interference and by instability in Afghanistan.

The EU is concerned about the restoration of the death penalty, the blasphemy law, the situation of ethnic and religious minorities and the establishment of special military courts to try civilians accused of acts of terrorism.

Pakistan is a major beneficiary of the EU’s unilateral trade preferences under the GSP+ component of the GSP scheme which were reinstated in 2014. As part of the process, the EP Committee on International Trade monitors compliance with the GSP+ requirements on the basis of the Commission’s biennial assessment report for Pakistan (2016-2017). The EU is Pakistan’s second largest trading partner (after China), with total two-way trade worth EUR 12.8 billion in 2017 and the EU taking in 35% of Pakistan’s total exports. Pakistan enjoys a EUR 0.5 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, good governance, human rights and the rule of law.

C. 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 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 (Resolute Support mission) with a training and advisory role. 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. In September 2017, the US deployed 3 000 additional troops and asked NATO to match this deployment. The EU, with strong support from the European Parliament, seeks an Afghan-led, Afghan-owned and Afghan-controlled peace process. From the institutional point of view, the main challenges faced by Afghanistan are the parliamentary and district council elections (due since 2015) which have been announced for October 2018 and the constitutional reform pending since the 2014 elections.

After the fall of the Taliban regime in 2001, the EU opened a delegation in Kabul. On 26 June 2017, the Vice President / High Representative appointed a Special Envoy who took office on 1 September 2017. An EU-Afghanistan Cooperation Agreement on Partnership and Development (CAPD) was signed on 18 February 2017 and entered into force provisionally on 1 December 2017 pending ratification by all EU Member States. A joint communication by the High Representative and the Commission of 24 July 2017 on ‘Elements for an EU Strategy on Afghanistan’, was supported by the Council conclusions of 16 October 2017. An Afghanistan-EU Human Rights Dialogue is also in place.

Afghanistan is the largest recipient of EU development funding in Asia. The EU allocated EUR 1.4 billion to Afghanistan for the 2014-2020 period, focusing 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 October 2016 Brussels Ministerial Conference on Afghanistan hosted by the EU was a success: 75 countries and 26 international organisations endorsed the Government’s reform agenda and pledged EUR 13.6 billion. The EU and its Member States committed EUR 5 billion. The EU is Afghanistan’s 10th largest trading partner. Afghanistan benefits from the EU’s most favourable trading regime, the ‘Everything But Arms’ (EBA) scheme.

Parliament has 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. In October 2016, the EU and Afghanistan signed a document entitled ‘Joint Way Forward on migration issues’. The EU is also providing support for the large numbers of returnees going back to Afghanistan from Pakistan and Iran since 2016.

D. Bangladesh

EU-Bangladesh relations date back to 1973. The 2001 Cooperation Agreement covers trade, economic development, human rights, good governance and the environment. The EU has committed up to EUR 690 million under the 2014-2020 Multiannual Indicative Programme.

The EU is broadly supportive of the Bangladesh Government’s reform agenda, and emphasises the need for it to deliver on its promises and ensure compliance with its human rights obligations. The EU is also Bangladesh’s largest trading partner.

Bangladesh is a parliamentary democracy in which power alternates between two parties, the Awami League (AL) and the Bangladesh Nationalist Party (BNP). The AL won the last legislative elections in 2014, and Sheikh Hasina became prime minister. Following violent clashes in 2015 between the two parties, the political situation remains fragile, with security instability and rising religious extremism. The BNP organises periodic strikes, with strong support among students and workers. There are currently reports of increasing human rights abuses and an escalation of political and sectarian violence.

Thanks to a dynamic private sector and a low-cost workforce, Bangladesh’s economic growth is currently around 7%, and it is among the few countries to have achieved the Millennium Development Goals. Working conditions and labour rights in the textile industry have improved since the Bangladesh Sustainability Compact, launched after the tragic Rana Plaza incident in July 2013. However, labour unrest continues to be a serious issue in Bangladesh, especially in industrial garment factory areas around Dhaka. As a Least Developed Country (LDC), Bangladesh benefits from the EBA arrangement, the most favourable trading regime available under the EU’s GSP. The EU is Bangladesh’s top trading partner on a total share of 23%, with two-way trade worth EUR 11.2 million in 2017.

Since August 2017, at least 655 000 Rohingya refugees have fled persecution in Myanmar to Bangladesh. Most of them do not have access to nutrition or basic infrastructure. The situation can only be resolved if Bangladesh and Myanmar implement their repatriation plan of 23 November 2017.

E. Sri Lanka

EU-Sri Lanka relations date back to the 1975 Cooperation Agreement, upgraded in 1995 by a third-generation Cooperation Agreement on Partnership and Development. The EU GSP+ benefits were restored for Sri Lanka in May 2017 as an incentive for political reforms and compliance with international conventions on human rights, labour rights, environmental protection and good governance. The European Parliament is closely monitoring Sri Lanka’s progress concerning effective compliance with the GSP+ criteria. The EU has provided Sri Lanka with EUR 760 million in development assistance over the past decade.

Sri Lanka suffered a civil war from 1983 to 2009 between the Sinhalese-dominated government and the Liberation Tigers of Tamil Eelam (LTTE). Encouraged by the army’s victory, the then President, Mahinda Rajapaksa, called early presidential elections in January 2015 but was defeated by Maithripala Sirisena of the Sri Lanka Freedom Party (SLFP). President Sirisena appointed Ranil Wickremesinghe of the United National Party (UNP) as his prime minister. After parliamentary elections in August 2015, the UNP formed a unity government with the SLFP, based on an agenda of good governance, national reconciliation and re-engagement with the international community. The change of government has led to strong economic growth and enhanced cooperation with the EU.

The upcoming political challenge is to consolidate political stability and to strengthen democratic institutions with a new constitution, to be adopted in 2018.

As a result of the progress made through the introduction of a legal framework for fighting illegal, unreported and unregulated (IUU) fishing that is consistent with international obligations on the fisheries governance system, on 21 April 2016 the European Commission lifted the ban imposed in January 2015 on Sri Lankan fish exports to the EU.

F. Nepal

EU-Nepal relations date back to 1973 and are based on the 1996 Cooperation Agreement. With nearly a quarter of the population living on less than USD 2 a day, Nepal depends on external aid for 25% of its budget.

The EU is one of Nepal’s biggest development aid donors and has tripled its development assistance to EUR 360 million for 2014-2020. There are high levels of inequality between the upper and lower castes and marginalised communities such as the Madhesi.

China and India are competing for influence in the country, which is slowly reconstructing after the 2015 earthquakes.

An EU Election Observation Mission observed elections to both houses of parliament and the provincial assemblies in Nepal on 26 November and 7 December 2017. The Communist Alliance (made up of the Communist Party of Nepal-Unified Marxist-Leninist (CPN-UML) and the Communist Party of Nepal-Maoist Centre (CPN-MC)) defeated the Congress party by an overwhelming majority in the parliamentary elections. The Communist Alliance also won the elections to six of the seven provincial assemblies. Local elections finally took place in three phases between May and September 2017, after being boycotted by the Madhesi representatives in Terai.

G. Bhutan

Isolated from the outside world for centuries, Bhutan is a tiny, remote kingdom with ancient Buddhist traditions located in the Himalayas between India and China. It is adapting to globalisation and strengthening its economy, while at the same time preserving its ancient traditions. It made a peaceful transition to a parliamentary democracy under the constitution adopted in 2008, guaranteeing the separation of powers under a constitutional monarchy.

The EU Multi-Indicative Plan 2014-2020 allocates EUR 42 million in assistance for Bhutan. The EU has had a strong presence in Bhutan since 1982, working to reduce poverty, promote democratisation and good governance and support sustainable agriculture and renewable natural resources.

The EP Delegation for relations with South Asia visited the country in May 2017. The EP has repeatedly acknowledged Bhutan’s unique development philosophy, initiated when it opened up to globalisation. It is based on the concept of Gross National Happiness (GNH), which statistically measures people’s quality of life and balances spiritual and material advancement.

H. The Maldives

EU-Maldives relations date back to 1983 when the head of the Commission Delegation in Colombo was accredited as non-resident ambassador. Although there is still no formal cooperation agreement, the EU provides cooperation support for rural communities, tourism and climate change mitigation.

After a period of political turmoil in 2015, the current President, Abdulla Yameen Abdul Gayoom, and his family are now firmly in control of all organs of state power, as well as of the ruling party, the Progressive Party of Maldives (founded by the former dictator Maumoon Abdul Gayoom, who is also the president’s half-brother). Since then, the human rights situation has progressively deteriorated, with increasing repression of the opposition. In July and August 2017, President Yameen ordered the army to shut down the parliament, thus avoiding impeachment, and in February 2018 he declared a state of emergency for one month.

The Maldives is known as a luxury holiday destination. Extremely vulnerable to climate change, this fragile archipelago is exposed to rising sea levels and coastal erosion, which pose a serious threat to the viability of the country. The other reality is high youth unemployment, gang violence and drug addiction, with increasing social unrest.

The Maldives graduated in 2011 from the UN’s Least Developed Country (LDC) category and attained upper middle income status in 2013. The economy is based mostly on tourism and fisheries. The EU is the Maldives’ fourth largest trading partner, accounting for a 10% share of the total trade in goods (2017).

 

[1]Texts adopted, P8_TA(2017)0334. 

Jorge Soutullo / Anna Saarela / Fernando Garcés de los Fayos