European Integration and Its implications on trade - Indian perspective

7/30/2019 European Integration and Its implications on trade - Indian perspective

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P r e s e n t e d b y : A s h w a t h P u t t u r

R e g n o : 1 0 3 3 0 1 0 0 7

European Integration and its

Implication on Trade between

Europe and India


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Project Timeline: FebruaryMay, 2012

Project Venue: University of Warsaw, Warsaw - Poland

Manipal University, Manipal - India

Faculty Guides in Poland: Dr. Jakub Zajczkowski,Aleksandra Jasklska

Student: Ashwath Puttur

Registration Number: 103301007

Batch: MESM 2010-2012

Faculty Guide in India: Prof.Chowdri Prasad

Date: June 16th, 2012


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An Introduction to European Integration

European Union is a viable community considered aiming to become United States of

Europe

Process of integration which has started in the year 1950 with six member states;

France, Germany, Italy, Netherlands, Belgium and Luxembourg

During the process, European Integration hardly considered to means of controlling

trade and free movement between countries

European integration is part of the global trend with a number of common policies

among participating countries for a better growth by removing barriers prevailing in

terms of trade


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India EU Free Trade Agreement- An approach

As per the statement of European Parliament, the trade is expected to increase 70.7

billion by 2011 and 160.6 billion by 2015

This FTA would expand the figures by EU exports to India $17.18 billion, while India

exports would increase by around $5 billion more

According to Free trade agreement, the EU-India are supposed to eliminate duties up to

90% on tariffs and other 10% will excluded or negotiated in trade

Catherine Ashton words ;

The recent times, relationship between European Union and India is in right place and there

is real opportunity to do something more than today by sharing, pooling and bringingtogether our knowledge and assets to operate in a right possible way to get more to offer to

India.Concentrate on the main aspects of trade creation and trade diversion, likely to

develop a deeper integration.


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Indian Trade Policy

The signing of a FTA between EU and India therefore implies a more rapid change in

tariffs for Indian than for the EU

But the current foreign trade policy is built around the main objectives of India is share of

global merchandise trade by earlier and using trade policy as an effective interest of

economic growth

The policy aims at bringing down transaction cost, removing controls and identifying a

hub in order to develop for manipulating, trade and services


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Trade balance

*EXPORTS & IMPORTS : (US $ Million)(PROVISIONAL)

FEBRUARY APRIL- FEBRUARYEXPORTS (including re-exports)2010-11 23608.36 220241.122011-12 24618.08 267409.89%Growth2011-12/ 2010-2011 4.28 21.42IMPORTS2010-11 32973.40 335502.152011-12 39781.68 434159.81%Growth2011-12/ 2010-2011 20.65 29.41TRADE BALANCE2010-11 -9365.04 -115261.032011-12 -15163.60 -166749.92

*http://www.economicinitiatives.com/NEWS/2012/2nd_April_2012.htm


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Over the last three decades, the average growth rate of Indian economy has improvedthrough economic performance varies between states and industrial sectors and GDP has

been doubled in last five years and consumer market has grown tremendously.

* Indian Economic Outlook 2011-12


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Policies regarding on Regulatory issues

Due transparency in government procurement contracts of state and central level

purchases in both the countries for the benefit of the people

To facilitate the implementation of range of reforms to improve the quality of services

from the point of European perspective

The issues for negotiation is the investment agreement could provide full transparency

and setting up a system of as single window information system for investment but

certain problems cannot dealt with FTA

Issue for negotiation is the application for modern custom procedures, facilitating inter-

state commerce, improving trade information will fosters transparency and

professionalism in trade


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However there are few controversies about IPR provisions and previous EU-India WTO

disputes appear to be settled but protection of traditional knowledge is also an issue for

both the parties with geographical indicators

A clause conferring that the both parties would have a competition law would seem easy

to agree but India might wish to see more on information exchange than competition

The next immediate proposed step is to know the existing situation of India to regulate

and make institutional arrangements and assure to its proposed benchmarks. The India

will incur costs for entering into a free trade agreement with EU and entitle the benefitstoo


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This table explains about the position of India and EU trade with main partners report

2010;

Source: EUROSTAT-TRADE -European Union :27 members


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Source: IMF-TRADE India -28 states


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Understanding India

At times, India has come across as a difficult partner for the west to develop a more

harmonious relationship with the Asian power with better understanding India and its

factors that bind the external policies

The European Union might be thinking India is simply part way along a path of

convergence towards to the norms and standards of the western world

The future of trade policy 2010-2015

"Trade is working for Europe's economic recovery by ensuring growth and jobs. Our

renewed trade strategy will open markets and connect Europe to the main sources and

regions of global growth. My aim is to ensure that European business gets a fair deal and

that our rights are respected so that all of us can enjoy the benefits of trade".

Karel De Gucht, Trade Commissioner


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How must the EU work with India?

As the EU aims to be upgrading its strategic relationship with emerging India

and to improve it, the bilateral dialogue must be enriched

The EU should discuss with India far more about, how the latter sees the new

global order and what role its wishes to play within it

As Partners in the new millennium system, the EU and India need to be

comprehend one another to become better collaborators in managing global

affairs and to enhance and enrich their bilateral relationship towards a real

strategic mode of partnership


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Political, Economic and Cultural dimensions towards India-EU Free Trade Agreement

Political and Economic

In further negotiation of economic cooperation, the EU and India are negotiating the

Broad Based Free Trade and Investment Agreement (BTIA), which would create one of

the largest Free trade areas in the world in terms of GDP and Population

The politics play an important role in negotiating the talks between two Emerging

countries in the world

Cultural

EU considers to behave logical towards India, but not due to some domestic issues

revolving around the talks that make India to think in different way


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Free Trade Agreement Negotiations -Perspectives

The idea of an FTA between India and the EU first arouse at a summit in 2005, when a

high level trade group was established to explore the potential of an agreement and it

opened the pave for negotiations

The deep integration with the economic impact of studies that mutually beneficial

between EU and India negotiations took place in 2007

The EU is still seeking better access to Indias financial and legal services sectors to

explore and make improvements in data protection especially with the pharmaceutical

firms

If it fails to reach the agreement on an FTA would broaden the negative trust between EU

and India and later become closer push to emerging powers with U.S. India may find it

harder to further liberalize its growing economy


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Concerns on Issues and areas for negotiations for the FreeTrade Agreement deal to be Success

Both the parties must decide the specific commodities consider for trade diversion and

include them in the agreement

The mutual recognition of conformity testing and certification standards for the

encouragement of intra-industry trade (IIT)

Improvement of information sharing and procedures with following of investment andgovernment procurement rules through transparency mechanism for the national

treatment of investors of EU and make sure that ,easily available to the public

Continuous improvement with regard to protection and enforcement of IPR regime in

India and competition policy

There is immediate action to make engagement with the trade unions and workers to

solve the issues revolving around and make sure that , having a mutual understanding

between them leads to a fair deal


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The Polish Perspective towards the EU-Indiarelations at the 21st century

The enlargement of European Union, the Poland is influenced in relation between India

for trade that enabled Warsaw to achieve the last strategic goal of its foreign policy

Indias international strategy will emphasize more on New Delhi as an importance of co-

operation between countries of north and south and also this is influenced by European

Union But at the outset of 21st century the India relation with the EU has implication on Poland

future as a new phase of relation with India, not only economic relation but also political

dimension

Poland has been seen in the 21st century as A GATE TO THE EUROPEAN UNION,

a link joining Asia with Western Europe

By this India is focusing on larger and developing countries like France, Germany, UK,

Spain, Poland rather EU as a whole.


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Poland trade- towards the enlargement of EuropeanUnion

Enlargement could also result in greater economies of scale , intra industry trade and

improved financial and banking arrangements serves as a gateway for goods and

services to EU, Central European Free Trade Area (CEFTA) and Common Independent

States markets

The enlargement in European Union could create trade enhancing affects and its impact

was on Indias exports to Poland on account of tariff induced uncompetitiveness had

negative affect on EU market

EU enlargement is a cause of concern for India, it could result in strengthening trade and

investment and sub-contract relationships within the EU to gain cost advantagerespectively


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Potential Benefits and costs of an EU-India FreeTrade Agreement

Benefits

The Biggest gain for the EU would include export of industrial and manufactured goods

to India -a 50% increase worth 5.1 billion Euros

Opening new markets leads to open to custom borders, co-operation of education, and

more employment oppournities in both sides

A strong global desire of protection for Intellectual Property Rights has been emphasized

foreign direct investment in India and most effective IPR regime in the country can

create jobs, provide taxable income to the Competition policy


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Costs

The coincide over the production structures between EU-India put forward their

consideration scope for trade diversion for India and in turn, it will increase its

imports from EU but at the expense of efficient suppliers

The policies and procedures in the areas like, trade facilitation, investment having

difference between the state and the central governmental levels

It is a considered to be major tool of trade policy between the countries also with the

others


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Conclusion

India is an Emerging power in the world economy and various researchers also called as

Incredible India or Responsible India as per the present economy. India and

European Union share democratic values and have converging strategic interest for the

economic co-operation or for the sustainable development of the economy

An Free Trade Agreement between the EU and India would have a positive impact onEuropean and Indian exports

Poland is seen as investment destination for the business point of view, helps to grow

healthy in all the sectors and might double the trade values in the coming years

Poland was one of the Indias closest friends and trading partner during the cold war and

subsequently has the low profile bilateral relations over the few decades

It is worth signing the ambitious BTIA at the Next EU-India summit would be highly

credited and also helps to raise the profile of Poland within both the EU and India


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Sooner the policy makers in New Delhi and Warsaw realise that the benefits could reap

out with the proposed FTA and also the expects visit of the Indian Prime Minster to

Poland , by 2013 , the first such visit for more than 33 years may be useful for the

feasibility of proposed partnership

It is better to have a Free Trade Agreement between EU-INDIA in the future becausewhich increases the standard of living and cut down the poverty rates to an extent as well

as boost the economy in all the sectors

More Trade leads to Investment, New businesses in both the countries, Good Educational

opportunities or exchange programs this can only happen when they signed the FTA

between two emerging countries.

Finally, it is important to highlight that the likely impact of an EU-India FTA will in turn

depend on the rounds in near future


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Thank You

European Integration and Its implications on trade - Indian perspective

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