The IBTBlog

Dire Straits: International Trade and the Maritime Transportation of Oil

Aaron Fellmeth — Thu, 26 Mar 2026 02:20:55 +0000

By Kailea Weitz
ASU Law Fellow

The current conflict between Israel, the United States, and Iran quickly evolved beyond geopolitics, rippling through shipping lanes, insurance and energy markets, and cross-border supply contracts. About a quarter of the world’s oil and natural gas supply, and one-third of sea-traded fertilizer, normally moves through the Strait of Hormuz. Its centrality to world shipping places it squarely at the center of the conflict. Maritime traffic in the Strait has nearly halted as energy prices see “wild swings” and food prices are soon to follow.

That disruption matters because legal risk can intensify before any formal closure is declared. Iran has signed but not ratified UNCLOS, has historically disputed its transit-passage regime, and its new supreme leader announced on March 12, 2026, that he would continue to keep the strait blocked. Maritime reports indicate the chokepoint effectively closed “not by Iran, but by shipping itself” due to fears of attack.

Maritime risk allocation is at the heart of the analysis. Once parties conclude that transit through a conflict zone has become dangerous, the key disputes become contractual: may owners refuse orders to proceed, may charterers insist, when is deviation justified, and who bears the delay and added cost if passage becomes effectively uninsurable or materially more hazardous? These are questions not for geopolitics but for transactional drafting language found in shipping and logistics contracts’ “safe port warranties” and “war risk charterparty agreements,” among others. Mondaq’s recent guidance emphasizes careful review of insurance coverages and exclusions, mitigation documentation, sanctions and regulatory compliance, and especially force majeure clauses which vary widely and often turn on whether performance is “prevented,” “hindered,” “delayed,” or only more expensive.

Marine insurance is the other major pressure point. If cover is withdrawn, repriced, or narrowed, risk allocation shifts rapidly through the entire chain of performance. War cover has remained available in the Gulf, but with increasing restrictions and sharply higher pricing. War-risk premiums in the Gulf rose more than 1000% from 0.15-1.25% to highs of 7.5% of vessel value with averages of 2.5% overall and 5% for US/UK/Israeli vessels, with premiums reaching ten times pre-conflict levels and tens of millions per trip. Increases of this magnitude affect whether voyages proceed at all, whether financing remains viable, and whether cargo owners, carriers, or buyers absorb the costs. The U.S. DFC’s Maritime Reinsurance Plan is also rapidly taking shape to restore confidence and resume trade flows by covering losses up to $20 billion in the Gulf. However, safety risk, not absence of insurance, is primarily plummeting transit after four missile strikes on vessels in the Strait and U.S. navy escorts will not be ready to escort vessels for weeks.

The conflict’s most immediate effect may therefore be less a formal closure of the Strait of Hormuz than a private-law reallocation of risk by shipowners, insurers, charterers, lenders, and counterparties. The question is who bears the consequences when the strait remains open as a matter of law but unusable as a matter of commercial reality.

Trump Administration ICC Sanctions Face Setbacks

Aaron Fellmeth — Tue, 24 Mar 2026 05:34:01 +0000

By Kailea Weitz
ASU Law Fellow

The predicate for the Trump Administration’s 2025 ICC sanctions is stated in Executive Order 14203: a view that the ICC’s “illegitimate and baseless actions” against the United States and Israel threaten U.S. sovereignty and undermine critical national security and foreign policy interests, setting a dangerous precedent, and endangering U.S. military personnel. The Administration’s objection, however, is not to ICC prosecution of U.S. personnel, but to the Court’s assertion of jurisdiction, preliminary investigations into U.S. personnel in Afghanistan, and arrest warrants targeting Israeli leadership. Neither the U.S. nor Israel is party to the Rome Statute recognizing ICC jurisdiction and EO 14203 reflects the longstanding U.S. position, enshrined in the American Servicemembers’ Protection Act of 2002 (ASPA), that U.S. and allied war criminals should be immune to facing justice before the ICC.

EO 14203 declares any effort to “investigate, arrest, detain, or prosecute” a “protected person” constitutes “unusual and extraordinary threat” to U.S. national security and foreign policy. It imposes sweeping sanctions, blocking all property and interests in property within U.S. jurisdiction of designated persons; prohibiting transfers, payments, exports, withdrawals, or other dealings in that property; prohibiting providing or receiving funds, goods, or services to or from designated persons; and suspending entry into the U.S., including family members.

Invoking the International Emergency Economic Powers Act (IEEPA), implementing regulations place designees on OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List. That designation prohibits U.S. persons from dealing, even indirectly, with SDNs or entities at least 50% SDN-owned, and exposes non-U.S. persons to sanctions for materially supporting SDNs or causing violations by U.S. persons. There are currently 13 ICC-related SDNs, including ICC judges and prosecutors designated in August 2025: Kimberly Prost, Nicolas Yann Guillou, Nazhat Shameem Khan, and Mame Mandiaye Niang. The AIPAC-backed Illegitimate Court Counteraction Act (H.R. 23) advances a similar legislative framework, imposing asset freezes and visa bans against persons aiding ICC efforts against Americans or Israelis. However, some of the sanctioned individuals had no role in investigating or prosecuting U.S. or Israeli personnel.

UN experts reacted swiftly and critically, describing the sanctions as a “direct assault against the independence of the tribunal and a devastating blow to victims worldwide”. They argued ICC judges, prosecutors, and lawyers must be free from intimidation and economic coercion to perform their duties and urged the EU and European Commission to shield ICC officials through the EU Blocking Statute.

Meanwhile, the ICC sanctions, as interpreted by OFAC, have been found likely to violate the First Amendment to the Constitution. Those arguments draw support from IEEPA itself, which excludes, with limited exceptions, the import or export of “information or informational materials” from its regulatory authority. In Smith v. Trump, the ACLU describes the sanctions as forcing U.S. advocates to stop providing legal analysis, evidence, and policy expertise to the ICC. A July 18, 2025, preliminary injunction found a likely First Amendment violation. In Rona & Davis v. Trump, enforcement was permanently enjoined against a wide range of advocacy, analytical, educational, training, and advisory activity tied to the ICC. OFAC’s 2024 GPE letter similarly recognized that merely hosting SDN-listed speakers for political dialogue was not prohibited, underscoring limits on sanctions where speech and information exchange are concerned. Nonetheless, the OFAC threat to First Amendment activities continues, because OFAC has not amended its regulations or issued public guidance clarifying that First Amendment activities do not fall within the sanctions. This recalcitrance foreshadows likely further defeats by OFAC in the courts.

Trump Seeks Alternatives After Supreme Court Tariff Ruling

Aaron Fellmeth — Sun, 22 Mar 2026 18:43:49 +0000

By Kailea Weitz
ASU Law Fellow

The Supreme Court’s February 2026 ruling was not the end of Trump-era tariffs. It held only that IEEPA could not support the President’s “reciprocal” and “fentanyl” tariffs. Express tariff authorities remained undisturbed, including the Trade Act of 1974 Sections 122, 201, and 301, the Trade Expansion Act of 1962 Section 232, and the Tariff Act of 1930 Sections 337 and 338, with many being explored by the Administration. Several require investigations and findings to

impose. Section 232 addresses imports threatening national security; Section 337 targets unfairly competitive import methods injuring “domestic industries”, typically in intellectual property disputes; and Section 301 retaliatory authority provides imposing authority to retaliate against “unreasonable” and “unjustifiable” policies and measures that burden U.S. commerce.

President Trump’s response was immediate. On the day of the ruling, the White House issued an order terminating ad valorem duties imposed under IEEPA, but he expressly preserved those imposed under Sections 232 and 301 and imposing a 10% ad valorem tariff for 150 days under Sec 122. Plans for several 337 and 301 investigations were announced, and existing 232 and 301 tariffs on China, among others, including on steel (50%), aluminum (50%), semiconductors (25%), timber/lumber (10%), vehicles (25%), and copper (50%), remain in place.

It is not surprising that the Administration, having lost one authority for import duties, immediately pivoted to the others identified by the Court, a decision already triggering new litigation. Two dozen states have filed suit challenging Trump’s use of Sec 122, arguing no statute requirements are met. Both Democratic representatives (H.R.2459) and senators have introduced the “Reclaim Trade Powers Act” to repeal Sec 122, along with a bill to shield small businesses from Trump’s tariffs more broadly (S.1593/H.R.3986).

Meanwhile, the refund consequences of the Supreme Court’s IEEPA ruling are substantial. On March 4, 2026, Judge Richard Eaton of the U.S. Court of International Trade ordered CBP to liquidate or reliquidate entries without regard to IEEPA duties. As the judge assigned to IEEPA refund cases, his statement that “all importers of record whose entries were subject to IEEPA duties are entitled” to seek refunds is significant. CBP will reportedly use an online portal for claims. Senate Democratic Leader Schumer is urging companies to pass anticipated savings onto consumers when approximately $175 billion in refunds is received. Consumer class actions involving Costco, FedEx, and Ray-Ban have already been filed. As more than 2,000 companies file lawsuits to recoup tariff payments, more consumer suits seeking to prevent “double recovery” will surely follow, particularly against companies that imposed itemized tariff charges.

However, one small business has publicly been advocating for a different approach by proactively and automatically refunding customers. For consumers, importers, states, and trade lawyers, the next litigation relates to which import duties adopted under other statutes will survive judicial review, and how quickly unlawfully collected duties can (and will) be refunded. Given the Republicans inactivity in Congress, it appears that Republicans wish to surrender their importation taxation authority to Trump. If their appetite for doing the same for a Democrat President is less certain, they do not appear to believe they will be bound by their own precedents.

Supreme Court: IEEPA Does Not Authorize Import Duties

Aaron Fellmeth — Sat, 21 Mar 2026 18:18:47 +0000

By Kailea Weitz
ASU Law Fellow

In February 2026, the U.S. Supreme Court held in the combined cases Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc., that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose import duties, invalidating President Trump’s 2025 “fentanyl” and “reciprocal” tariffs. Those measures previously included a 25% duty on most Canadian and Mexican imports, a 10% duty on most Chinese imports, and baseline 10% duties on imports from all trading partners, with higher rates on dozens of countries. The tariffs were repeatedly increased, decreased, and otherwise arbitrarily modified by Trump, allegedly justified to punish states for drug trafficking and persistent trade deficits.

Before the Court, the Trump Administration argued IEEPA’s power to “regulate … importation” included tariffs because tariffs have long been used to regulate imports. The government’s merits brief contended that the phrase encompasses duties and that IEEPA continued to provide independent authority for nearly unfettered presidential discretion, despite Congress’s enactment of more specific tariff statutes, including Section 122 of the Trade Act of 1974.

The government brief also pointed to IEEPA’s legislative history as emerging from the Trading with the Enemy Act (TWEA), which authorized presidential regulation of foreign goods during wartime, and argued that IEEPA extended similar authority into presidentially declared national emergencies during peacetime. On that view, the President could deploy tariffs as an “emergency” response tool without being confined to the narrower conditions and limits of other tariff laws.

The Court rejected each argument before it. It held that IEEPA does not generally authorize the President to impose tariffs. The Court emphasized that Article I gives Congress, not the President, the power to lay duties and that no President had ever invoked IEEPA to impose any import duties despite regularly invoking IEEPA for other purposes and invoking other statutes to impose tariffs. It reasoned that if Congress had intended to delegate the “distinct and extraordinary power” to impose tariffs, it would have done so expressly, as it has in other tariff statutes. The Court noted that the Trump Administration’s position would empower the President to impose duties on “imports from any country, of any product, at any rate, for any amount of time” from “two words separated by 16 others” in IEEPA: “regulate” and “importation”.

While the ruling therefore narrowed one asserted source of presidential tariff authority, broader statutory tariff framework remains undisturbed. The Court itself pointed to other laws expressly delegating tariff powers, including Sections 122, 201, and 301 of the Trade Act of 1974. Thus, the decision is best conceptualized as a separation-of-powers holding: it foreclosed an overbroad reading of a general emergency statute without touching tariff tools Congress clearly delegated.

EU Withdrawing from the Energy Charter Treaty

Aaron Fellmeth — Sat, 05 Oct 2024 01:49:59 +0000

By Kelsey McGillis
Law Student Editor

In July 2024, the European Union (EU) and Euratom formally announced their intention to withdraw from the Energy Charter Treaty (ECT), effective in one year. This decision follows a modernization effort to align the treaty with climate goals, yet many EU member states remain dissatisfied with the revisions. Initially, discussions among member states focused on an uncoordinated withdrawal, allowing some countries to remain in the treaty. However, the European Commission now advocates for a unified exit by the EU, Euratom, and all member states to prevent internal investor disputes and to ensure legal clarity.

Established in 1994 at the end of the Cold War, the ECT aimed to promote international cooperation in the energy sector by fostering open markets, protecting foreign energy investments, and resolving disputes between investors and host countries. The modernization process introduced significant changes, including the exclusion of fossil fuel investments and the introduction of intra-EU arbitration. However, EU countries are concerned that the updated treaty does not adequately address their environmental policies, as investment claims against such policies have created tensions. Notable cases, such as Sweden’s Vattenfall challenging Germany’s nuclear phase-out, highlight the challenge of balancing investment protections with state sovereignty to regulate environmental issues.

The EU’s decision to withdraw is rooted in the belief that the ECT conflicts with its climate objectives under the European Green Deal and the Paris Agreement. The ECT has been criticized for allowing fossil fuel companies to use its dispute mechanisms to challenge climate regulations, undermining the EU’s environmental efforts.

In May 2024, the EU officially began its withdrawal process, marking a significant step toward resolving this tension. This decision emerged from a political compromise known as the “Belgian roadmap,” enabling the EU and Euratom to exit the ECT while some member states continue to support its modernization. Several EU countries, including Ireland and Portugal, have expressed their intention to withdraw, demonstrating broad support for a unified approach. A coordinated exit would avoid legal uncertainties and provide a clearer path for advancing EU climate policies.

One major concern regarding withdrawal from the ECT is its “sunset clause,” which extends protections for foreign investments for 20 years after a member state’s exit. The EU is advocating for a coordinated withdrawal among member states to mitigate risks associated with this clause. Without coordination, remaining member states could face legal complications, including investor disputes within the EU, which could weaken a unified climate policy.

While the legal outcome of this coordinated exit remains uncertain, energy investors within the EU are advised to adopt alternative legal strategies to protect their interests. This may involve restructuring investments or negotiating direct agreements with individual member states to avoid potential regulatory challenges or litigation.

New Edition of Fellmeth’s International Business Transactions Textbook Available

Aaron Fellmeth — Tue, 30 Jul 2024 19:22:55 +0000

A new edition of Aaron Fellmeth’s Introduction to International Business Transactions will become available in both print and e-book form in August 2024. The second edition, published by Edward Elgar, is in full color and includes up-to-the-minute important developments in the law of IBT, as well as more of its traditionally entertaining style.

Law and business faculty can order a review copy at:

https://www.e-elgar.com/shop/usd/introduction-to-international-business-transactions-9781035318155.html

U.S. Supreme Court Changes the Regulatory Environment

Aaron Fellmeth — Fri, 26 Jul 2024 18:42:29 +0000

By Kelsey McGillis
Law Student Editor

On June 28, 2024, the U.S. Supreme Court fundamentally altered the landscape of administrative law with its decision in Loper Bright Enterprises v. Raimondo. This 6-3 ruling overruled the nearly four-decade-old precedent set by Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., which had required courts to defer to executive branch agencies when interpreting ambiguous statutes. The Chevron doctrine, established in 1984, dictated a two-step process: first, courts would determine if the statute was clear; if not, they would defer to the agency’s interpretation if it was “reasonable.” This principle was based on the specialized expertise of the agencies, which is used to interpret and implement complex statutory schemes, often dealing with technical scientific or economic matters (the Chevron decision itself dealt with the EPA’s air quality regulations). “Judges,” in contrast, “are not experts in the field . . . .”

In Loper Bright Enterprises, the Supreme Court reversed this approach. The case involved the National Marine Fisheries Service (NMFS), which had interpreted the Magnuson-Stevens Act to mandate that commercial fishing vessels fund at-sea monitors. Loper Bright challenged this interpretation, arguing it exceeded the agency’s authority. The Supreme Court agreed, ruling that courts should no longer automatically defer to agency interpretations of statutes they are charged by Congress with administering. Instead, courts must independently evaluate these interpretations using the judge’s expertise in science, engineering, economics, and other technical subjects. The decision significantly shifts the balance of power from the Executive Branch to the judiciary.

Chief Justice John Roberts, in his 35-page opinion, called the Chevron doctrine “fundamentally misguided.” Roberts stated that Chevron deference contradicts the Administrative Procedure Act, which mandates in general terms that courts decide legal questions independently. He asserted that even technical or scientific ambiguities within a statute should be resolved by courts, not agencies, although agency interpretations may still be considered under the less deferential Skidmore standard.

The Supreme Court’s decision will have profound implications for agency regulation of international trade and investment. In the past, federal agencies frequently made decisions effectively insulated from judicial review, resulting in great and potentially arbitrary power over industry actors. However, most federal agencies, such as the International Trade Commission (ITC) and the Department of Commerce, make decisions based on extensive research and analyses conducted by experts. They will now face increased scrutiny by lay judges having no experience or knowledge of these fields when interpreting statutes related to international trade. This change could lead to more frequent and varied judicial challenges to agency actions, introducing regulatory uncertainty. Without the assurance of judicial deference, agencies may find it more difficult to implement and enforce regulations, resulting in less predictable regulatory outcomes for businesses involved in international trade and investment. Companies involved in trade remedy proceedings before the Department of Commerce (DOC) or the International Trade Commission (ITC) may find new avenues for challenging adverse agency actions.

Similarly, interpretations of the import and export legislation by Customs and Border Protection, the Bureau of Industry and Security, the Committee on Foreign Investment in the United States, and other federal agencies may face an increasing number of challenges, with more frequent changes in the authoritative interpretation of federal statutes.

Negotiations Continue in EU Countervailing Duties on Chinese-Made Electric Vehicles

Aaron Fellmeth — Fri, 28 Jun 2024 19:14:42 +0000

By Kelsey McGillis
Law Student Editor

This week, the European Union (EU) and China agreed to hold consultations regarding the EU’s proposed tariffs to be imposed on Chinese-made electric vehicles (EVs) entering the European market. This decision signals a potential resolution in the months-long contentious subsidy dispute between the two regions. The current tensions trace back to a probe launched by the European Commission last year, to determine if Chinese subsidies directed to Chinese EV manufacturers were allowing such EV manufacturers to sell vehicles within the EU at artificially low prices, thus harming their European competitors. China has vehemently denied these claims, insisting that its EV industry’s growth is a result of fair competition and not subsidy supported. That China has a command economy inevitably complicates the analysis of competitive cost. The Commission’s findings led to an announcement of potential tariffs; up to 48% of the value of imported Chinese EVs. These tariffs directed at the manufacturers are set to come into force on July 4, with the proposed application of duties, levied on the consumers, expected by November, 2024.

While the European Commission describes the tariffs as corrective measures to level the playing field, critics argue that such tariffs may trigger a broader trade war. Germany, whose economy heavily relies on the Chinese market, has shown reluctance to support countervailing duties. European automakers have also voiced concerns in claiming that such tariffs directly contribute to global trade fragmentation. Conversely, the United States has adopted a much more aggressive stance, recently imposing a 100% tariff on Chinese EV imports in an effort to offset the alleged subsidies.

China, not surprisingly, has responded to the EU’s actions by threatening reciprocal tariffs on a variety of EU goods, and have indicated they may file a claim the World Trade Organization (WTO) Dispute Settlement Body if its concerns are not addressed. Amid the tensions, the agreement to hold technical talks in Brussels offers a glimmer of hope. European Commission Spokesperson Johanna Bernsel confirmed that there would be technical discussions aimed at finding a solution that addresses the perceived subsidization of Chinese EVs. This move is seen as a step towards de-escalating the situation and finding a mutually acceptable resolution.

New U.S. Regulations Enhance the Commerce Department’s Power in Antidumping and Countervailing Duties

Aaron Fellmeth — Thu, 02 May 2024 21:29:25 +0000

By Kelsey McGillis
Law Student Editor

The U.S. Department of Commerce has recently amended its regulations to enhance enforcement of antidumping (AD) and countervailing duty (CVD) laws. The “Regulations Improving and Strengthening the Enforcement of Trade Remedies Through the Administration of the Antidumping and Countervailing Duty Laws” went into effect on April 24, 2024, following a public notice and comment period. The amendments introduce several changes to the regulations, including adjustments to the process of determining dumping and countervailable subsidies, enhanced enforcement mechanisms, and updates to the calculation methodologies for duties. The amendments make the following specific changes: expanded scope of Particular Market Situations (PMS) and improved investigation into transnational subsidies, which are subsidies that a foreign government gives to a recipient outside its borders.

A Particular Market Situation (PMS) refers to market conditions allegedly affecting price accuracy in comparisons between a foreign market and the United States for antidumping and countervailing duty investigations. Under the 2015 Trade Preferences Extension Act, in considering the dumping margin or countervailable subsidy, Congress directed Commerce to consider sales to be outside the “ordinary course of trade” when there are situations in which Commerce “determines that the particular market situation prevents a proper comparison with the export price.” Under the regulations now adopted, Commerce may consider factors such as weak property rights, inadequate intellectual property protection, poor human rights or labor standards, and ineffectual environmental regulations in assessing the dumping margin or countervailable subsidy, thereby increasing import duties to reflect putative advantages to foreign exporters caused by the identified practices.

For example, if labor rights violations or unimpeded intellectual property infringement lower the cost of production in an exporting country, Commerce may consider this a PMS that justifies treating imports from that country as having an artificially low price and impose correspondingly increased import duties.

The changes also broaden the regulations’ scope, remove confusing language, adopt a more flexible approach to identifying price distortions, and include non-governmental entities in considerations of relevant factors in determining the export price. Commerce clarified that these changes are not intended to influence foreign policies (e.g., to impugn foreign labor, environmental, or human rights practices) but to evaluate whether prices or costs are distorted by the policies.

In addition, Commerce was previously constrained by a regulation, 19 C.F.R. § 351.527, which limited its ability to investigate transnational subsidies. Countervailable subsidies were primarily limited to those given a state government to business firms within that state. With the removal of this restriction, Commerce is now empowered to delve into allegations of cross-border subsidies by foreign governments. This means that Commerce can scrutinize instances where foreign governments are suspected of providing subsidies in third states that unfairly benefit their own, or the third state’s, industries and distort international competition. By lifting this regulation, Commerce can more effectively address and combat allegedly unfair transnational trade practices that have emerged since the Uruguay Round Agreements. However, the lack of clear guidance or explicit text on how to address these investigations, leaves this change’s implementation somewhat uncertain.

According to the Commerce Department, the rationale for these changes is to strengthen the enforcement of antidumping and countervailing duty laws. The regulations align with the Biden administration’s “new story on trade”, emphasizing fairness and sustainability concerns. U.S. Secretary of Commerce Gina M. Raimondo has asserted that these changes demonstrate the Commerce Department’s commitment to safeguarding American workers and producers against unfair trade actions. However, the compatibility of these new regulations with the WTO Agreements, especially the Agreement on Subsidies and Countervailing Measures, is open to debate. It is possible, perhaps likely, that the new measures will be challenged under the WTO’s Dispute Settlement Understanding.

India Signs Historic Treaty with EFTA

Aaron Fellmeth — Wed, 27 Mar 2024 11:12:54 +0000

By Kelsey McGillis
Law Student Editor
&
Prof. Aaron Fellmeth
Faculty Editor

After nearly two decades of negotiations, India has signed a landmark trade and investment treaty with the European Free Trade Association (EFTA), comprising Iceland, Liechtenstein, Norway, and Switzerland. This deal, the Trade and Economic Partnership Agreement (TEPA), is expected to bring investments worth $100 billion into India across various sectors over the next 15 years.

The TEPA is, first, a free trade agreement under Article XXIV of the GATT and Article V of the GATS. It reaffirms GATT commitments, harmonizes customs regulations, and eliminate customs duties according to schedules of commitments in the annexes. It also includes more detailed regulations on sanitary and phytosanitary measures, technical barriers to trade, and liberalization of trade in services. In addition, the TEPA incorporates foreign direct investment protections between the EFTA states and India, and investment promotion obligations and expectations.

Unlike free trade agreements negotiated by the United States, the TEPA includes no TRIPS-plus obligations. However, consistent with recent EU practice, the TEPA does include obligations relating to trade and sustainable development, including some relating to climate change, compliance with International Labor Organization (ILO) standards, and cooperation in achieving and promoting sustainable development.

The TEPA is anticipated to bring substantial investment, with the EFTA bloc committing $100 billion over 15 years in sectors like pharmaceuticals, food processing, engineering, and chemicals. Although this investment commitment, primarily sourced from provident funds in EFTA countries, is not expected to be legally binding, it is an expected result of the conclusion of the treaty.

Prime Minister Narendra Modi emphasized the importance of this agreement in boosting economic progress and creating opportunities for Indian youth. Ratification by both parties is required for the agreement to take effect, with Switzerland aiming to complete the process as soon as next year.

India’s decision to sign TEPA marks a significant departure from its historical stance on import substitution policies. While political factors still influence some protectionist measures, economic imperatives may eventually lead to a more open trade approach in the future. The timing of these trade deals coincides with a need to address unemployment, which continues to pose a persistent challenge in India, despite economic growth. The TEPA is expected to generate 1 million jobs in participating countries over 15 years, aligning with the focus on job creation in India’s current election.

The TEPA paves the way for a similar deal between the much larger EU and India. Although negotiations between these two parties had stalled in the past, they were re-launched in June 2022, along with negotiations for two additional treaties: a bilateral investment treaty and an agreement on geographical indications. The European Commission maintains a website with the current drafts texts that form the basis of negotiations.