Innocent Bystanders

Implications of an EU–India Free Trade Agreement for Excluded Countries

image of Innocent Bystanders
The European Union, under its ‘Global Europe’ initiative, has since 2006 been pursuing trade agreements with its major global trading partners. An EU–India Free Trade Agreement is currently under negotiation; if successfully concluded it is likely to have knock-on effects on other countries’ trade with both India and the EU, the trade of the ‘innocent bystanders’ excluded from the agreement.

The authors consider the implications of the EU–India Free Trade Agreement for various groups of other countries, including the ACP countries and those in South Asia, the latter group being most strongly impacted. The analysis considers not only trade in goods but also trade in services, and focuses not only on quantities but also on the prices at which trade is conducted.

The authors then consider how excluded countries might respond to the Free Trade Agreement, both at an individual level and at a systemic level.



Barriers to services trade between EU and India, and areas of interest in a possible FTA

Although services trade is an important trading sector for the EU and India and bilateral trade between them is relatively strong, there are significant barriers to services trade between the two. Hence an FTA offering substantial coverage of services à la GATS Article V could help deliver significant improvements in access to both markets. Our judgement, given the political economy of reforms in India (for instance, see World Bank, 2004), is that it would also allow a more rapid liberalisation of India’s services than can be accomplished unilaterally.


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