Although India and the European Union have been engaged in negotiations on a free trade agreement since June 2007, a deal doesn’t seems likely to be coming anytime soon. What’s stopping them from arriving at a consensus?
When, in June 2007, the European Union (EU) and India started talks on a bilateral free trade agreement (FTA), the negotiations were expected to be long and complex. But no one expected it to linger on for years. However, that’s exactly the situation. India and the 27-nation bloc, since then, have missed several deadlines to conclude the very sought-after India-EU FTA – officially known as the Bilateral Trade and Investment Agreement (BTIA). Although India and the EU are hoping that a deal can be struck before their annual summit in February 2013, several unresolved issues related with market access suggest that the negotiations are still far from completion. Moreover, since then its development implications have been of increasing concern to stakeholders, policy analysts and civil society in India and Europe.
Critics argue that the proposed FTA is going to have a far reaching consequence for both India as well as for the lives and livelihood of Indian masses. The reason is simple. As per the proposed agreement, both the EU and India are supposed to completely eliminate duties on 90% of tariff lines with the remaining 10% to be negotiated or completely excluded. Considering the kind of exposure the Indian companies will get in the European market, the India-EU FTA looks like a great bargain for India from the top. However, a closer look and one can easily figure out that given the unevenness of the industrial development and wealth between the EU and India, such a high level of trade liberalisation would flood the Indian market with cheap and subsidised European goods. It will adversely affect a lot of industries, leading not only to large scale job loss, but also potential closure of several units in the small and medium-scale industries. In fact, the sector that is going to be hardest hit by the FTA is the unorganised sector comprising over 90% of India’s 450 million strong workforce with no job security and little income.
Agriculture, with almost 70% of Indian population still directly dependent on it, also remains a significant area of concern to all, not only because European subsidies make it the most unbalanced segment of the negotiations, but also for further threatening India’s food self-sufficiency in a time of global food crisis. Impact assessment studies of the FTA suggest very little gain for India in commodity trade, especially in agriculture. Policy analysts believe that the trade surplus in agriculture will turn into a trade deficit and a long-run fall in agricultural employment is imminent. According to a report by Penang (Malaysia) based Third World Network, an international network of organisations and individuals involved in North-South issues, “While India’s share in the EU’s markets in cereals, other crops, agro-food and products from animal origin will remain constant (at 1.2, 0.6, 1.1/1.3 and 0.1% respectively), the EU will increase its share in all these markets in India as a result of the FTA.” For instance, in primary products the EU’s share increases from 4.9% to 16.7% by 2020, and from 17.6% to 23.5% in cereals. In products of animal origin, the EU’s share is projected to increase from 7.5% to 10.4% by 2020 and from 2.9% to 5.3% in agro-food. Even another study points out that in both agricultural trade as well as trade in agro processed products, India will see a deficit increase by $50 million each as imports will outstrip exports.
When, in June 2007, the European Union (EU) and India started talks on a bilateral free trade agreement (FTA), the negotiations were expected to be long and complex. But no one expected it to linger on for years. However, that’s exactly the situation. India and the 27-nation bloc, since then, have missed several deadlines to conclude the very sought-after India-EU FTA – officially known as the Bilateral Trade and Investment Agreement (BTIA). Although India and the EU are hoping that a deal can be struck before their annual summit in February 2013, several unresolved issues related with market access suggest that the negotiations are still far from completion. Moreover, since then its development implications have been of increasing concern to stakeholders, policy analysts and civil society in India and Europe.
Critics argue that the proposed FTA is going to have a far reaching consequence for both India as well as for the lives and livelihood of Indian masses. The reason is simple. As per the proposed agreement, both the EU and India are supposed to completely eliminate duties on 90% of tariff lines with the remaining 10% to be negotiated or completely excluded. Considering the kind of exposure the Indian companies will get in the European market, the India-EU FTA looks like a great bargain for India from the top. However, a closer look and one can easily figure out that given the unevenness of the industrial development and wealth between the EU and India, such a high level of trade liberalisation would flood the Indian market with cheap and subsidised European goods. It will adversely affect a lot of industries, leading not only to large scale job loss, but also potential closure of several units in the small and medium-scale industries. In fact, the sector that is going to be hardest hit by the FTA is the unorganised sector comprising over 90% of India’s 450 million strong workforce with no job security and little income.
Agriculture, with almost 70% of Indian population still directly dependent on it, also remains a significant area of concern to all, not only because European subsidies make it the most unbalanced segment of the negotiations, but also for further threatening India’s food self-sufficiency in a time of global food crisis. Impact assessment studies of the FTA suggest very little gain for India in commodity trade, especially in agriculture. Policy analysts believe that the trade surplus in agriculture will turn into a trade deficit and a long-run fall in agricultural employment is imminent. According to a report by Penang (Malaysia) based Third World Network, an international network of organisations and individuals involved in North-South issues, “While India’s share in the EU’s markets in cereals, other crops, agro-food and products from animal origin will remain constant (at 1.2, 0.6, 1.1/1.3 and 0.1% respectively), the EU will increase its share in all these markets in India as a result of the FTA.” For instance, in primary products the EU’s share increases from 4.9% to 16.7% by 2020, and from 17.6% to 23.5% in cereals. In products of animal origin, the EU’s share is projected to increase from 7.5% to 10.4% by 2020 and from 2.9% to 5.3% in agro-food. Even another study points out that in both agricultural trade as well as trade in agro processed products, India will see a deficit increase by $50 million each as imports will outstrip exports.
For More IIPM Info, Visit below mentioned IIPM articles
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
| BBA Management Education |
