When India and the European Union finally concluded their long-pending Free Trade Agreement last week, leaders on both sides hailed it as a landmark moment for global commerce.
European Commission President Ursula von der Leyen called it the “mother of all deals”, a thought echoed by Indian Prime Minister Narendra Modi. Some media outlets described it as one of the “biggest trade deals ever signed”.
But while the deal’s trade aspects are built on binding commitments, penalties and enforcement mechanisms, its promises on climate action and environmental protection are notably softer, relying on consultation rather than compliance.
Two decades in the making, the deal is expected to reduce tariffs and administrative burdens and expand market access for India’s labour-intensive sectors, including textiles, leather products, tea, coffee and spices.
Yet experts who spoke to Dialogue Earth say the deal’s dedicated chapter on Trade and Sustainable Development (TSD) reveals a familiar imbalance.
While core trade provisions covering aspects including goods, services, competition, subsidies and intellectual property are framed in enforceable language, environmental and climate commitments are not. Potential disputes over sustainability issues are steered towards dialogue and consultation, rather than penalties-based mechanisms that underpin the rest of the agreement.
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This asymmetry reflects the fact that trade obligations are treated as justiciable economic commitments, while environmental provisions are often positioned as normative or aspirational.
Aparna Roy, lead for climate change and energy, Observer Research Foundation Centre for New Economic Diplomacy
What this means in effect, some experts say, is that while the India–EU FTA may encourage a degree of alignment on sustainability standards, it should not be mistaken for an instrument of climate governance.
Language changes meaning
That distinction is evident in the language used to describe the agreement’s enforceable commitments and its non-binding environmental provisions.
Core trade provisions in the agreement have been framed using binding words such as “shall” and are backed by enforcement mechanisms including sanctions and retaliatory measures, noted Aparna Roy, fellow and lead for climate change and energy at the Observer Research Foundation think-tank’s Centre for New Economic Diplomacy. The environmental and climate commitments are mostly focused within the chapter on TSD and are framed around cooperation, she said.
While the phrasing used in the TSD chapter – which mentions renewable energy, a reduction in maritime sector emissions and sustainable management of natural resources – also includes “shall”, these precede non-binding targets such as “strengthening dialogue”, “enhancing the integration of sustainable development” and recognising the need to “address” climate change, according to the 2022 textual proposal of the chapter.
“Politically, softer environmental language is often a deliberate design choice to prevent trade negotiations from stalling, particularly when partners have divergent development priorities or regulatory capacities,” said Roy.
To preserve room for possible diplomatic manoeuvring, environmental provisions in trade agreements tend to prioritise flexibility over ambition. This, she said, weakens their capacity to address systemic risks such as emissions leakage, biodiversity loss and carbon-intensive value chains that cut across borders.
Dispute settlement for trade, consultation for environment
While the TSD chapter and its commitments are legally binding, enforcement relies largely on dialogue, consultation, expert review and monitoring mechanisms rather than sanctions, experts noted. The chapter also contains no binding targets and is not subject to the agreement’s main dispute settlement mechanism.
In contrast, trade provisions fall under the dispute resolution mechanism, which can be triggered by violations of tariff, investment or market-access rules.
“This asymmetry reflects the fact that trade obligations are treated as justiciable economic commitments, while environmental provisions are often positioned as normative or aspirational,” Roy said.
The presence of consultation mechanisms and monitoring committees for TSD commitments in FTAs does not automatically translate into implementation of their output on the ground, said Debarshee Dasgupta, a doctoral researcher on environmental and water governance at SOAS, University of London. “While such mechanisms create space for dialogue, the extent to which their recommendations are acted upon is not always guaranteed.”
A 2019 assessment of TSD provisions in EU FTAs by the Centre for European Reform think-tank notes that they are typically excluded from enforceable dispute settlement and do not carry financial penalties for non-compliance.
Members of the European Parliament and civil society groups have even described them as “toothless” in practice, according to the assessment. These critics point to an imbalance within EU trade architecture, where investors can seek financial compensation under investment protection mechanisms, while environmental and labour concerns have far more limited avenues for redress, the review noted.
A TSD approach put forth by the European Commission in 2022 introduced the possibility of using sanctions as a last resort for significant breaches of the Paris Agreement and the fundamental labour principles of the International Labour Organization. This was implemented in agreements such as the EU-New Zealand FTA of 2023, but has not been applied to the India-EU agreement.
Nevertheless, there have been examples of consultation and monitoring mechanisms seen in the India-EU FTA being successfully used by the EU to ensure compliance with environmental commitments.
Subia Ahmad, senior research associate at the Centre for Policy Research, pointed to the Carbon Border Adjustment Mechanism (CBAM), an import duty imposed by the bloc on carbon-intensive goods. However, whether “similar levels of compliance can be achieved through the India-EU trade partnership remains uncertain”, she said.
The things cooperation could achieve
Much like trade, environmental concerns reach across different local, national and global considerations and scales. They are increasingly being thought of in the context of risks to trade and economic exchange, said Dasgupta.
There is therefore a need for India and the EU to “cooperate [and] exchange knowledge that goes beyond simple technology transfer, to assimilate some of these concerns in the specific trade-related provisions”, he said.
But in the current geopolitical context, consensus and cooperation are increasingly fragile foundations for environmental governance, said Roy. With the US having left the Paris Agreement, multilateral climate institutions are under strain.
Trade relations are being shaped more by matters such as industrial policy and supply-chain security than by collective problem-solving, she noted. In such a landscape, consensus often settles at the lowest common denominator, while cooperation becomes conditional and driven by interest. “The need for coordination is greater than ever, but the political space for binding commitments is shrinking”, she said.
Nonetheless, Dasgupta observed that India and the EU have strong incentives to cooperate, such as through deeper exchanges of regulatory knowledge and policy approaches. In the present geopolitical moment, cooperation should not be discounted, he said. “Doing so risks a tragedy of the commons,” where parties act in their own self-interest rather than for the common good, leading to loss of shared resources.
At this moment, it might be too early to say what this trade agreement can realistically deliver for climate action, as the deal is yet to be ratified by the European Parliament, said Ahmad.
Nonetheless, Roy said it is unlikely to function as a transformative climate instrument. Its value lies instead in an enabling role: aligning standards, improving transparency, facilitating clean technology cooperation, and embedding climate considerations within supply chains rather than directly enforcing emissions reductions, she noted.
The agreement could contribute to regulatory convergence on issues such as sustainable manufacturing, carbon accounting and environmental reporting, which are becoming central to global trade, Roy said.
But meaningful climate action will continue to depend far more on domestic policy choices, public investment and multilateral climate finance than on trade-based enforcement, she noted. Trade agreements can support climate objectives, but they cannot substitute for stronger national commitments or binding international climate governance, she added.
This article was originally published on Dialogue Earth under a Creative Commons licence.
