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.



Trade diversion and trade re-orientation: Sectoral analysis

One can further decompose the potential impacts of the EU–India agreement into different sectors. In this chapter we approach this issue by identifying tariff lines for which there are positive trade values from excluded countries and in which the preferential partner could match or surpass the excluded countries’ access to the target market. In essence, we now investigate all the scenarios analysed above with the exception of scenario 1 by SITC rev. 3 sectors. The analysis is carried out at 6-digits HS level, and then aggregated to SITC categories.


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