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.



EU Trade Agreements

What can we expect an EU–India Agreement to cover?

This chapter briefly sketches the history of EU thinking about trade agreements, showing that bilateral and regional arrangements have always had a major role. In the last decade we have seen the EU move outside its region and former colonies to focus on larger developing country and emerging markets. EU–India must be seen as part of this progression. In these agreements, and even more so in agreements with the ACP states, the EU has encouraged considerable asymmetry over the degree and timing of liberalisation. We expect to see this in goods markets with India but probably to a smaller extent than previously. EU rhetoric has also come to stress so-called deep integration – regulatory harmonisations and liberalisations and a focus on services. The latter are particularly significant for India. There are huge potential gains from deep integration for the partners to an agreement if it can be achieved, but the consequences for excluded countries are mixed: in some cases new discrimination could arise but in others excluded countries will benefit from the reforms induced by the bilateral agreement. Moreover, given the histories of the two partners, we do not actually expect a huge amount of deep integration.


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