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Trade Impact Assessment of an EU-India Free Trade Agreement

Author

Listed:
  • Joseph Francois

    (Johannes Kepler University Linz)

  • Hanna Norberg

    (Lund (School of Economics and Business) and IIDE)

  • Miriam Manchin

    (University College London)

Abstract

We analyze the effects of potential measures to liberalize trade between the European Union and India using a computable general equilibrium (CGE) model of world trade. Overall, our analysis shows that there are potential gains to be reaped from signing a bilateral FTA between the EU and India. For all scenarios, the FTA is expected to yield positive real income effects for both economies, both in the short- and long-run. The effects are, however, quite small due to the low levels of bilateral trade. In the short run, the real income gains in the EU are expected to range between Û3 and Û4,4 billion (higher for more ambitious liberalization scenarios), which amount to less than 0.1 percent of GDP. In the long run, the effects of an FTA in the EU are much smaller. For the Indian economy, the short-term income effects in absolute measure are similar to those in the EU, but due to differences in the size of economies, the relative effect is bigger in India (ranging from 0.1 to 0.3 percent of GDP). In the long-run, the effects on the Indian economy are expected to be larger.

Suggested Citation

  • Joseph Francois & Hanna Norberg & Miriam Manchin, 2008. "Trade Impact Assessment of an EU-India Free Trade Agreement," IIDE Discussion Papers 20080601, Institue for International and Development Economics.
    • Handle: RePEc:lnz:wpaper:20080601
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    Citations

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    Cited by:

    1. Alessandrini, Michele & Fattouh, Bassam & Ferrarini, Benno & Scaramozzino, Pasquale, 2009. "Tariff Liberalization and Trade Specialization in India," ADB Economics Working Paper Series 177, Asian Development Bank.
    2. Engelbert, Tanja & Brockmeier, Martina, 2012. "Analyse Des Freihandelsabkommens Zwischen Der Eu Und Indien Unter Berücksichtigung Von Nicht-Tarifären Handelshemmnissen Im Agrar – Und Ernährungsbereich," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 133034, German Association of Agricultural Economists (GEWISOLA).
    3. Alessandrini, Michele & Fattouh, Bassam & Ferrarini, Benno & Scaramozzino, Pasquale, 2011. "Tariff liberalization and trade specialization: Lessons from India," Journal of Comparative Economics, Elsevier, vol. 39(4), pages 499-513.

    More about this item

    Keywords

    CGE; EU-India Free Trade Area; GTAP;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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