Study on India-European Union Relations

Submitted To: Prof. Yogesh Joshi

Presented By: Nipath Belani Prince Vyas Jaymin Patel

ABOUT EUROPEAN UNION

The European Union (EU) is an economic and political union of 27 member states, located primarily in Europe. The EU was established by the Treaty of Maastricht on 1 November 1993. The EU combined generates an estimated 28% share ( 11.955 trillion in 2010) of the nominal gross world product and about 21% of the PPP gross world product. The EU has developed a single market through a standardized system of laws which apply in all member states, ensuring the free movement of people, goods, services, and capital. It maintains common policies on trade and the member states have adopted a common currency, the EURO, constituting the Eurozone. Largest economic body in the world. Worlds most successful model for advancing peace and democracy.

OBJECTIVES
1. To study the relationship that EU India share. 2. To study the trade relationship EU and India. 3. To know and understand the benefits and costs of EU- India FTA 4. To see EU-Indias attempts at dismantling Trade Barriers. 5. To know the EU- India trade negotiations. 6. To understand the EU-India summits. 7. To study the future scenario of EU-India relationship.
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LITERATURE REVIEW
Troubling news reports indicate that a newly-minted Free Trade Agreement between the European Union and India would permit companies to circumvent visionary safeguards built into Indias 2005 Patents Act, widely seen as one of the most progressive patent laws in the world. Over the past decade, India fought hard to bring its laws into full compliance with international standards, while simultaneously protecting public health and safeguarding Indias pharmaceutical industry. Now, the EUs trade negotiators are trying to take away those gains. Priti Radhakrishnan & Tahir Amin New York Times 02/11/2006

Nayanima Basu & Joe C Mathew / New Delhi January 27, 2011 Article India and the EU FTA Despite all official assurances, the path towards a free trade agreement (FTA) between India and the European Union (EU) this year remains ambiguous, as both sides are unwilling to relax their stand on the biggest stumbling block the issue of data exclusivity. While the commerce ministry, the government arm responsible for scripting policy framework for intellectual property rules in the country, says there is no let-down in this matter, its EU counterpart insist that insistence on data exclusivity is integral to the trade deal.

The US share in India's textile exports has increased, whereas shipments to the European Union (EU) have declined in the current fiscal, reflecting different economic scenarios in the world's two major economies. According to disaggregate data, for April-September 2010-11 period, the share of the US in India's total textile exports has increased to about 20 per cent from a shade in the 19 per cent in the year ago. On the other hand, the 27-nation bloc EU contributed 4.50 percentage points less to India's textiles exports at 29.81 per cent for the period under review. Trade analysts attribute the contrasting trend to a pick- -up in the US economy while several countries of EU are facing financial troubles and lack of economic confidence. Between them the US and the EU account for about 50 per cent of textile exports, which faced difficult times following the recession in these economies between 2008 and 2009. However, the situation has improved in the current financial year. Published in the The Herald 11/6/2009

Article on EUs official Website The Eleventh European Union - India Summit was held in Brussels on 10 December 2010. The Republic of India was represented by the Prime Minister, Dr Manmohan Singh. EU was represented by Mr Herman Van Rompuy, President of the European Council, and Mr. Jose Manuel Duro Barroso, President of the European Commission. Leaders emphasised that EU and India, which share common values relating to democracy, rule of law, civil liberties and respect for human rights, agreed to reinforce their strategic partnership for their mutual benefit in all areas and to better contribute to the resolution of the challenges of the twenty first century. They discussed bilateral, regional and global issues of common interest and concern. In the context of overall EU-Indian interaction, leaders noted Indias development priorities as well as the new dimension of EU, following the entering into force of the Lisbon Treaty.

Eurozone
The euro zone currently consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, Malta, The Netherland, Portugal, Slovakia, Slovenia and Spain.

Seven State will Join when they fulfill the strict entrance
requirement. The countries are Bulgaria, The Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, Three Member i.e. Sweden, Denmark and UK have an opt out provision
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European Union India

Bilateral relations between the European Union (EU) and India date

back to the 1960s, when India was one of the first countries to
establish relations with what is now the European Union. The two signed bilateral agreements in 1973, when the UK joined. The most recent cooperation agreement was signed in 1994 and an action plan was signed in 2005. As of now the Commission is pursuing a free trade agreement with India.
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European Union India

The relationship between India and the EU initially developed at a low pace. They were established in 1962 and largely focused on economic issues, resulting in a Commercial Cooperation Agreement (1973), and a Commercial and Economic Cooperation Agreement (1980). The EC became Indias main trading partner: in 1990 the EC purchased 28% of India's exports and sold 29% of its total import.

However, India recorded a high trade deficit with the EUs caused
by, among others, the EUs protectionist policy creating barriers for textiles and other Indian products on the European markets.
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European Union India

However, India recorded a high trade deficit with the EC caused by, among others, the ECs protectionist policy creating barriers for textiles and other Indian products on the European markets. The relationship intensified in the last decade of the 1990s, following the collapse of the Eastern Bloc and Indias new economic policy, which oriented more on free trade and private initiatives. During this period, the EU lacked a clear foreign policy, but deepened its economic co-operation and started dialogue with Asian countries, especially with China. This stimulated India to spread its attention so far largely focused on the U.S. and to include the EU in its sphere of interest
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European Union India

In the first decade of the 21st century, this growing cooperation was institutionalized. In 2000, the first annual EU-India summit was held. In 2004, both partners signed a Strategic Partnership Agreement. In 2005, they agreed on a Joint Action Plan, which was revised in 2008. Meanwhile, in 2007, they had started negotiations on a free trade agreement (FTA), which is expected to be completed in 2014. Simultaneously, collaboration has expanded to other fields, such as security. The FTA is likely to be shallow and meets with much concern in India, particularly in its two economic key sectors of the service sector (which provides 60% of the GDP) and agriculture (which employs 60% of the population).
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European Union India

There is also disagreement in the WTO. Its Doha Development Round since 2001 has not yet led to major results, because of the differences between the developed nations (including the EU) and the major developing countries, in which India takes a leading role. Finally, there is also discord after five EU member states, including France and Germany, opposed to Indias bid for a permanent seat in the UN Security Council (together with Germany, Japan, and Brazil: the so-called G4). The lack of a univocal, active and clear EU policy towards India is an obvious element impeding the further intensification of its relationship with India.

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EU India (Trade)
The EU is India's largest trading partner, accounting for 20% of Indian trade. However India accounts for only 1.8% of the EU's trade and attracts only 0.3% of European FDI, although still provides India's largest source for India. Trade between the two has more than doubled from 25.6 billion euros ($36.7 billion) in 2000 to 75.9 billion euros in 2010, with further expansion to be seen. According to a report in 2010, India, at that time, was the eighth largest trading partner of the European Union, behind China and Russia. The EU and India hope to increase their trade in both goods and services and investment through the Free Trade Agreement negotiations launched in 2007.
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EU India (Trade)
Following the EU-India Summit in February 2012 negotiations entered an intense phase. Important issues include market access for goods, the overall ambition of the services package and achieving a meaningful chapter on government procurement. India is an important trade partner for the EU and an emerging global economic power. The country combines a sizable and growing market of more than 1 billion people. The value of EU-India trade grew from 28.6 billion in 2003 to 79.9 billion in 2011. EU investment in India more than tripled between 2003 and 2010: going from 759million in 2003 to 3 billion in 2010. Trade in commercial services tripled during the same time period, going from 5.2billion in 2002 to 17.9 billion in 2010.

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EU India (Trade)
India has embarked on a process of economic reform and progressive integration with the global economy that aims to put it on a path of rapid and sustained growth. However, India's trade regime and regulatory environment remains comparatively restrictive India still maintains substantial tariff and non-tariff barriers that hinder trade with the EU. In addition to tariff barriers to imports, India also imposes a number of non-tariff barriers in the form of quantitative restrictions, import licensing, mandatory testing and certification for a large number of products, as well as complicated and lengthy customs procedures
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EU India (Trade)
With its combination of rapid growth, complementary trade baskets and relatively high market protection, India is an obvious partner for a free trade agreement (FTA) for the EU. The parameters for an ambitious FTA were set out in the report of the EU-India High Level Trade Group in October 2006, which was tasked with assessing the viability of an FTA between the EU and India. Other studies have reinforced the economic potential of an FTA between the EU and India, notably a sustainability impact assessment was carried out by the EU. Negotiations for a comprehensive FTA were started in June 2007 and are ongoing. This would be one of the most significant trade agreements, touching the lives of 1.7 billion people. India enjoys trade preferences with the EU under the Generalised Scheme of Preferences.

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EU India FTA Benefits

1.

Relatively easy to negotiate with EU

2. Potential for 30% increase in each way flows of bilateral FDI as a direct result of signing an FTA 3. Potential for economic gains for both sides from deep integration 4. Potential for Regulatory Convergence

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EU India FTA Costs

1. Trade diversion
2. Structural and policy impediments in the Indian economy which may limit the gains from deep integration 3. Anti-dumping policy could undermine the benefits of a FTA

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Leading Client and Supplier Countries of the EU27 in Merchandise Trade (value %) (2010, excluding intra-EU trade) The Major EU Import Partners The Major EU Export Partners The Major EU Trader Partners

Rank.

EU Imports from

Mio euro % world Rank. EU Exports to Mio euro % world Rank. Imports+Exports Mio euro % world

Extra EU27:

1,492,175

100.0

Extra EU27:

1,348,509

100.0

Extra EU27:

2,840,684

100.0

1 2 3 4 5 6 7

China USA Russia Switzerland Norway Japan Turkey

281,996 169,297 154,909 84,123 79,084 64,845 42,014

18.9 11.3 10.4 5.6 5.3 4.3 2.8

1 2 3 4 5 6 7

USA China Switzerland Russia Turkey Japan Norway

242,353 113,111 105,432 86,515 61,171 43,709 41,822

18.0 8.4 7.8 6.4 4.5 3.2 3.1

1 2 3 4 5 6 7

USA China Russia Switzerland Norway Japan Turkey

411,649 395,106 241,424 189,556 120,906 108,554 103,185

14.5 13.9 8.5 6.7 4.3 3.8 3.6

8
9

South Korea
India

38,602
32,991 32,290

2.6
2.2

8
9

India
Brazil

34,793
31,277 27,981

2.6
2.3

8
9

India
South Korea

67,784
66,584 63,566

2.4 20
2.3 2.2

10 Brazil

2.2 10 South Korea

2.1 10 Brazil

Leading Exporters and Importers of Merchandise Trade in the World (2009) including EU27 Member States and intra-EU Trade

The Major Importers

The Major Exporters

The Major Trader Partners

Rank. Imports

billion

% World Rank. Exports

billion

% World Rank. Imp.+Exp.

billion

% World

World

9,067

100.0

World

8,934

100.0

World

18,001

100.0

EU27

3,299

36.4

EU27

3,267

36.6

EU27

6,567

36.5

1 2 3 4 5 6 7 8 9 10

USA China Germany France Japan Utd. Kingdom Netherlands Italy Belgium Canada

1,128.6 682.1 663.3 400.0 382.5 342.9 316.8 292.1 251.7 250.7

12.45 7.52 7.31 4.41 4.22 3.78 3.49 3.22 2.78 2.76

1 2 3 4 5 6 7 8 9 10

China Germany USA Japan Netherlands France Italy Belgium Utd. Kingdom South Korea

885.4 799.1 744.4 390.2 356.1 345.9 288.2 264.6 251.9 235.2

9.91 8.94 8.33 4.37 3.99 3.87 3.23 2.96 2.82 2.63

1 2 3 4 5 6 7 8 9 10

USA China Germany Japan France Netherlands Utd. Kingdom Italy Belgium South Korea

1,873.0 1,567.5 1,462.4 772.7 745.9 672.9 594.8 580.3 516.3 481.4

10.40 8.71 8.12 4.29 4.14 3.74 3.30

21 3.22
2.87 2.67

Developing Countries Market Share in EU Imports

90%
80% 75.2% 70% 67.6% 78.9%

60%

58.3%

50%

40%

30%

20%

10%

0% Total Agricultural products Fuels Textiles & Clothing

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EU imports from Developing Countries

1,000 900 800

700

600

500

400

300

200

100

0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Other

Textiles & Clothing

Fuels

Agricultural products

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Source: Eurostat (Comext, Statistical regime 4)

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EU India Trade
Indian imports from EU constitute 2.6% and export constitute 1.8% of its total import and export.

India currently accounts for 1.2% of worlds trade.

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EU Trade with India (Merchandise)

The Expected trade between India and European Union in Merchandise is expected to reach $251 Billion by 2015 27

EU Trade with India (Services)

The Expected trade between India and European Union in Services is expected to reach $321 Billion by 2015. 28

EU Trade with India (Sectors)

Agriculture:
Total trade in agriculture amounted to 67 Billion with India in 2010

Fisheries:
EU imported 3.7 billion worth of fish and fishery products and exported 0.9 billion worth of fisheries goods Billion with India in 2010

Services:
In 2007, services contributed 71.7 % of the gross value added within the EU, although the share of services in total trade (goods and services) has remained fairly stable at around 25 % to 27 % with India in 2010

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EU Trade with India (Industrial Goods)

Automotive:
EU automotives exports in 2010: 88 billion EU automotive imports in 2010: 42 billion Biggest markets: USA, China, Switzerland, Russia, Turkey

Chemicals:
EU chemicals exports in 2010: 118 billion EU chemicals imports in 2010: 75 billion Biggest markets : US, Canada, Switzerland, Asia (China, India, Japan and ASEAN countries)

Aviation:
EU civil aviation exports in 2010 (est): 45.7billion EU civil aviation imports in 2010 (est): 32,2 billion Biggest markets : USA, China, India, Brazil.

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EU India Dismantling Trade Barriers

The European Commission's Trade and Investments Barriers Report, published in March 2012, points out that some progress has been made to dismantle trade barriers in India: Two trade barriers were fully removed in 2012: export restrictions on cotton and security requirements for telecommunication equipment. Progress has also been achieved with regard to sanitary and phyto-sanitary rules. No positive movement has been seen in the area of equity caps. India's industrial policies contain trade-restrictive elements. The report also identified India's national manufacturing policy as a key priority for reform.

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EU India Trade Negotiations

The negotiations cover: Access to each other's markets, for goods, services and to public procurement contracts, The framework for investment The rules that frame trade, such as intellectual property and competition Sustainable development, growth in trade is in tandem with the environment, social and labour rights.

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EU India Summits
Reviewing the two sides' efforts in developing the bilateral strategic partnership, the joint action plan reckoned that in politics, dialogue and cooperation have enhanced through regular summits and exchanges of visits and that in economy, mutual investments have increased dramatically in recent years, dialogue in macro economic policies and financial services has established and cooperation in energy, science and technology and environment has been launched. Under the joint action plan, EU and Indian would enhance consultation and dialogue on human rights within the UN framework, strengthen cooperation in world peacekeeping mission, fight against terror and non-proliferation of arms, promote cooperation and exchange in developing civil nuclear energy and strike a free trade deal as soon as possible.

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EU India Summits
No. 12 11 10 9 8 7 6 5 4 3 2 1 Month and Year Feb 2012 Nov 2011 Nov 2010 Sept 2008 Nov 2007 Oct 2006 Sept 2005 Nov 2004 Nov 2003 Oct 2002 Nov 2001 June 2000 Location New Delhi London New Delhi Marsaille New Delhi Helenski New Delhi Haque New Delhi Copenhagen New Delhi Libson 34

EU India Summits
Since the first EU-India Summit in June 2000 an increasingly strong political dialogue has characterized the EU-India cooperation: yearly Troika Ministerial Meetings, Senior Officials Meetings every six months, and regular, de facto, yearly Summits, along with the establishment of Political working groups on Consular Affairs and terrorism (COTER Troika) and the adoption of Joint Declarations on Terrorism and Cultural Cooperation. The EU-India Round Table adds The civil society component to the EU-India Partnership. A new dimension was added in 2004 when the EU-India Summit decided to implement this Strategic Partnership through an Action Plan and bring concrete domains of collaboration to Centre stage.
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EU India Summits
The Action Plan defines concrete areas where the EU and India should become Active and influential collaborators in global political, economic and social developments. The pace of economic reforms and economic development in India over the last years has Generated a strong interest for more cooperation in the field of trade and trade-related matters. The Trade and Investment Development Programme (TIDP), launched under the previous CSP, provides an important element of EU trade-related assistance which will help strengthening Investment and trade links between Europe and India. TIDP aims to smoothen impediments to Mutual trade and investment flows in various fields through training, technical assistance and Provision of equipment.

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EU India Summits
The Court of Auditors Special Report of 2003 highlights the successes of more than 20 years of cooperation And the justification for the EC to remain an important donor in this country. The Court Concluded that the Commissions management has been reasonably successful in targeting the Poor and in addressing sustainability for the majority of the projects/programmes in India. This Has been achieved also by a move from classical rural development and infrastructure projects To the establishment of sector support programmes in health and education, thus supporting the Governments reform agenda, good governance and effectiveness, always with a view to assure a More systematic attention to targeting the poor and sustainability of results.

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EU India Summits
Civil society, including Ngos and social partners, is an integral part of EU-India Cooperation, both in the EU and in India offering the possibility of real added value, particularly With regard to achieving the Millennium Goals, promoting sustainable development and Managing globalization (according to the EUIndia Round Table). EC Co-operation has aimed at targeting various development related issues such as environment, gender, Health, Human Rights, advocacy and governance, and/or enhancing awareness between India And the EU, promoting activities of mutual interest, strengthening existing partnerships or Facilitating the creation of new ones, including educational, scientific and cultural exchanges. Currently, more than 150 projects involving Ngos and civil society actors are ongoing for a Combined amount of over 150 million.

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th EU India 12 Summit
EU and India advance negotiations on economic cooperation and future free-trade pact, and agree on further energy and research collaboration. The EU and India stepped up cooperation on trade, energy and research at their meeting in New Delhi on 10 February. The EU was represented by European Council president Herman Van Rompuy and Commission president Jos Manuel Barroso. The Summit was divided into 4 main parts 1) Trade cooperation 2) Energy and climate change 3) Research and innovation 4) Security
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th EU India 12 Summit
Trade cooperation The EU and India expect to complete negotiations on a free-trade pact which aims to boost trade in goods and services. The EU-India free trade agreement will be the single biggest trade agreement in the world, benefiting 1.7 billion people, said president Barroso. It would mean new opportunities for both Indian and European companies. It would mean a key driver for sustainable growth, job creation and innovation in India and Europe. The EU is India's largest trading partner, accounting for about 86bn of trade in goods and services in 2010. Bilateral trade in goods rose by 20% between 2010 and 2011. India has climbed from 15th to 8th in the list of the EU's main trading partners since 2002. The EU exported almost 35bn of goods to India and imported 33bn in 2010.

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th EU India 12 Summit
Energy and climate change

At the meeting, leaders on both sides pledged to work together to improve energy security, efficiency and safety. The EU will step up its cooperation with India to develop low carbon energy sources, especially renewable energy.
Research and innovation Last year India, the Commission and EU countries launched a pilot research programme on water and bio-resources. At this meeting they adopted a strategy to identify additional areas for research cooperation such as energy, health and information and communication technologies. The EU and India will also increase research ties through more exchanges between universities and industry.

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th EU India 12 Summit
Security

The two sides identified ways to increase cooperation in fighting terrorism, piracy off the Somali coast, and cyber-crime. Leaders also discussed how India could help bring Iran back to international negotiations about its nuclear programme.

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EU India Future
The strategic partnership between the European Union and India is vital to Europe's future prosperity and security. EU and India to reaffirm their alliance based on shared values of democracy, liberty and human rights and the summit should also act as a boost to efforts to negotiate a free trade agreement between the EU and India, a move which would further reinforce the growing economic and commercial importance of the strategic partnership. EU with an opportunity to support India's leadership in the strifetorn South Asia region, to help make India central to the reconstruction of a post-conflict Afghanistan and to work with India on combating international terrorism emanating from its neighbourhood and the Naxalite insurgency domestically. India is a business hub for all the other countries in the world.

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Conclusion
European Union development cooperation activities with India have a long record of success. Since the first EU-India Summit in June 2000 an increasingly strong political dialogue has Characterised the EU-India cooperation: yearly Troika Ministerial Meetings, Senior Officials Meetings every six months, and regular, de facto, yearly Summits, along with the establishment of Political working groups on Consular Affairs and terrorism (COTER Troika) and the adoption of Joint Declarations on Terrorism and Cultural Cooperation. The EU-India Round Table adds The civil society component to the EU-India Partnership. A new dimension was added in 2004 when the 5 The EU-India Summit decided to implement this Strategic Partnership through an Action Plan and bring concrete domains of collaboration to Centre stage.

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Conclusion
The European Union with its geographical enlargement is increasingly acquiring a far more important say in global affairs and in India's contiguous regions. The EU-India Strategic Partnership is therefore a significant and strategically relevant partnership for India's emerging strategic profile. The EU-India Strategic Partnership is a partnership between equals and being an equitable relationship it facilitates a smoother functioning and an easier path to work out strategic convergences between the European Union and India in terms of strategic management. However, the future success of the EU-India Strategic Partnership would depend heavily on how much India can invest strategically in this partnership in terms of playing active and assertive security roles in regions in which both the European Union and India have vital strategic and security interests.

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