Assessing the potential impact of an EU-India trade agreement

01-07-2020

The EU and India are major actors in the international arena and the discussions over a possible Free Trade Agreement has been ongoing for several years. This study analyses the potential effects of an FTA between EU and India in a "Cost of Non Europe" perspective. The results of a quantitative simulation of a potential FTA in goods and services indicate that welfare gains from increased trade for both sides may be between € 8 billion and € 8.5 billion (0.03 % increase with respect to the baseline for the EU and about 0.3 % for India). Furthermore, a qualitative analysis suggests that potential gains may appear from a coordinated EU action in addressing possible side effects, distributive impacts and externalities (such as inequalities, labour market effects, poverty and development implications, environmental issues) and from increased coordination in the provision of global public goods. By considering these aspects, the Cost of Non-Europe in the field may be larger.

The EU and India are major actors in the international arena and the discussions over a possible Free Trade Agreement has been ongoing for several years. This study analyses the potential effects of an FTA between EU and India in a "Cost of Non Europe" perspective. The results of a quantitative simulation of a potential FTA in goods and services indicate that welfare gains from increased trade for both sides may be between € 8 billion and € 8.5 billion (0.03 % increase with respect to the baseline for the EU and about 0.3 % for India). Furthermore, a qualitative analysis suggests that potential gains may appear from a coordinated EU action in addressing possible side effects, distributive impacts and externalities (such as inequalities, labour market effects, poverty and development implications, environmental issues) and from increased coordination in the provision of global public goods. By considering these aspects, the Cost of Non-Europe in the field may be larger.