India welcomes future FTA with the EU

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Written by Akli Hadid   
Monday, 29 October 2007
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ImageWhile the EU is still negotiating free trade agreements with ASEAN and Korea, negotiations with India should start next December.

  • Indian Commerce and Industry Minister about the free trade agreement between the EU and his country that he didn’t think it would be a difficult agreement. He added that since the EU and India have a trade volume of 50 million US Dollars (35.3 million Euros), that his country and the EU “can do much more through a bilateral agreement than multi-laterally”.

    The talks are due to start next December, and analysts expect more difficulties than the Indian minister in reaching a deal. The two sides hope to conclude an agreement within one year, yet The Hindu, an Indian daily newspaper, claims that it may take two years for the pact to become a reality. Why would reaching a deal be so difficult? There have been disagreements between the two parties in the Doha round of WTO talks, and India has had a difficult time dealing with the agricultural consequences of the FTAs it signed with Thailand and Sri Lanka.


    150 excluded products

    Indian farmers are worried about having to compete with EU agricultural products. The agricultural sector represents 18.6% of the GDP and employs 60% of the country’s population. Therefore, 150 agricultural products have been excluded from the FTA, ranging from sugar and eggs to honey, fruits and vegetables.

    Another 520 items will be shielded from tariff cuts out of more than 5,000 products covered under the agreement. Tariffs on all other items will be reduced to zero within 10 years of the implementation of the agreement.


    Exporters on their feet
  • Both Indian and European exporters would have a lot to gain from an FTA between the two countries. Indeed, Indian exporters will be able to increase their exports to the EU by 20%, while EU exports to India would be boosted by 57%, according to a report. Indian textile exporters would increase their exports by 46%, worth 3.6 billion Euros.

    The EU can only gain from signing a free trade agreement with the world’s 10th largest economy and one of the world’s fastest growing markets. In imposing itself in India, the EU should also eye FTAs with China and Brazil. Of course, if possible, and FTA with Russia would also be welcome, which would also be a way to ease tensions between the two countries.

Akli Hadid 
Seoul - South Korea





Last Updated ( Tuesday, 30 October 2007 )
 
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