Introduction

The republic

of

Indian

maintains

an

ongoing

dialogue

with

the Supranational Institution of the European Union which is separate from

the bilateral relation with sovereign member states of the European Union.
In Asia, the positive public perception of Europe is highest in India. India, the
world's most populous democracy, has strong and effective strategic
partnerships with France, UK and Germany. The foremost areas of
programmed India-EU-28 cooperation are in the domains of education &
cultural exchanges, joint-research in science & technologies and lawenforcement.

India in Europe:
Europe is an important destination for Indian students seeking to pursue undergraduate and post-graduate education overseas. United Kingdom is the prime
destination for Indian students within the European Union. Ayurvedic
traditional medicine and Yoga have been popular in Europe since its
introduction into Europe in the mid-19th century.
Indian fine arts and culture is well received in Europe. India has regularly held
cultural events in Euro endian multinational companies operating in industrial
engineering and ICT domains are spreading their markets to cover Europe via
both quality-price competition and innovative substitutes.

Europe in India:
Bangalore, Hyderabad, Chennai and Pune have a steadily growing base of
European expatriates who have created niche high-value-addition Small and
medium-sized enterprises in engineering, biotechnology and ICT sectors
as joint ventures with Indian partners. European start-up ventures in ICT
technology increasingly use Indian back-offices and development centers

during their kick-off phase to maximize seed money. Some European actors
have focused their acting careers on Bollywood movies and by modelling in
advertisements for the Indian market.

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. 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.

RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY

o To understand the Trade and Investment between India-EU

o To study the types of goods and services India trades with EU
o To study role of free trade agreement between India-EU
o To know the achievements and future scope of trade between India-EU

PURPO

PRIMARY DATA:
The primary sources of data refer to the first-hand information. Primary data is
collected with the help of students pursing degree in Bachelor of Arts and their
study notes.
SECONDARY DATA:
Secondary data is one which already exists and is collected from the published
sources. The sources from which the secondary data was collected are
newspapers and magazines like Economic Times, the EU Website and the
Internet.

LITERATURE REVIEW
A large number of empirical studies over the past two decades have shown that
migration and goods trade flows are complementary in nature, and not
substitutes, as theorized in the preceding literature. In a review of nearly fifty
studies, it was found that immigration to the host country had a significant
positive effect on the trade flows between the host and home country, that the
impact was usually greater for imports to the host country and lower for trade
in homogenous goods where there was less requirement for customization
(Genc. et al. 2011). There are two main channels through which migration has
an impact on goods trade flows. First, migration can help in trade creation as
it lowers the transaction costs involved in international trade. These transaction
costs are mainly informational barriers about knowledge of foreign markets,
laws, business practices, languages, customs and culture and migrants provide
useful skills and resources in overcoming these barriers. Through this channel,
migration can boost both exports from the host country and/or imports to the
host country (Gould 1994, Head and Ries 1998, Dunlevy and Hutchinson
1999, Girma and Yu 2002, Rauch and Trinidad 2002, Dunlevy 2006). Trade,
can in turn, lead to greater demand for immigrants if firms in host countries
wish to expand their operations in the immigrants country of origin. The
second channel is the preference effect channel whereby immigrants prefer to
consume certain products of their native countries such that it draws imports to
the host country. This largely includes trade in food products though it can
cover any item that is uniquely produced only in the native region. The size of
the immigrant stock can also affect trade in different ways. For example, a
larger immigrant stock may increase the number of potential networks that can
be built between the host and home region and increase the volume of
international trade (Rauch 2002). The size of the immigrant stock would
matter in developing trade through the preference effect but there could also

be certain thresholds beyond which migration does not have any substantial
effect on international trade (Egger et. al 2011). Further, even small diasporas
and emigrant stocks could have a large influence in trade creation if they are
able to control large parts of specific industries and swing trade towards their
countries of origin. In India, a couple of studies have explored the relationship
between migration and merchandise trade between India and West Asia and
Canada respectively. Karayil (2007) studied the relationship between
migration and trade with the six GCC (Gulf Cooperation Council) countries in
West Asia. India imports most of her oil requirements from West Asia and is
involved in large scale manpower or labour export as over five million
Indians, nearly half the emigrant stock, reside in West Asia. While these labour
flows have yielded substantial remittance flows to India, it also boosted
exports to West Asia through the preference effect, to meet the requirements
of the large Indian emigrant population. Walton-Roberts (2009)s micro level
study on the relationship between migration and trade linkages with Canada
had several interesting insights. For example, visa restrictions on mobility of
professionals appeared to be the major barrier in hindering the development of
trade flows. Indian language skills was not an important criterion for trade
development as English was widely spoken in India and at times business
people preferred speaking in English to connect with a pan-Indian audience.
As a large majority of the Indian immigrants and diaspora in Canada
originated from a small area within India (Doaba region of Punjab), the lack of
familiarity with other Indian regions constituted a disadvantage for more
broad- based trade development between India and Canada. Thus, regional
specificity in international migration from India through networks need not
necessarily overcome the informational barriers in international trade due to
unfamiliarity of immigrants with other parts of India. These studies show that
the linkages between migration and goods trade are complex, even if they are
by and large complementary in nature. Indian immigrants do not necessarily
constitute as one category there could be Punjabi immigrants, Gujarat
immigrants, and South Indian immigrants and these divisions across various
dimensions have implications for the linkages between migration and trade.
The section on the diamond trade in this paper illustrates this specificity of
communities and networks in trade creation and the section on the food

sector shows the operation of the preference effect in international trade. The
link between migration and trade in services has been well documented and is
integral to the definition of trade in services under the World Trade
Organisations (WTO) General Agreement on Trade in Services (GATS).
There are four modes through which international trade in services takes place:
Mode 1 refers to the cross-border supply of services, Mode 2 refers to
consumption abroad, Mode 3 refers to commercial presence of service
suppliers in other countries usually through firm subsidiaries and Mode 4
refers to presence of natural persons in foreign countries supplying services.
Mode 4 is the most obvious link between migration and trade in services
though services supplied through other modes can also involve mobility. For
example, tourism or student migration is associated with tourist or educational
services that are largely covered under the Mode 2 definition. The information
technology and information technology-enabled services (IT-ITES) and health
sectors are two particularly important sectors where migration and services
trade are deeply related, particularly in the Indian context (Chanda 2008a, b).
The dramatic growth of the IT-ITES sector in India can be attributed in part to
an earlier generation of high skilled migration of computer professionals to the
USA and the concomitant development of firms in India that provided onshore and off-shore services. These services include software exports,
consulting, support and training, outsourcing, systems integration among many
others. Mobility of IT professionals is key to the success of the industry as the
services require a high degree of Intra-Company Transfers to worksites outside
India on short-term and long-term contracts. The migration of doctors and
nurses constitute the clearest link between migration and trade in health
services and there has been a long standing relationship between India and the
UK in this sector. Other aspects such as medical tourism are also relevant and
are increasingly gaining importance. Apart from these two sectors, there are
various other professional services offered by lawyers, accountants, architects,
etc. across international borders on a contractual basis that generate substantial
economic activity. Tourist travel and purchases abroad also constitute a
significant route through which migration and services trade are interlinked,
especially in the EU-India context as Europe is a popular destination for Indian
tourists. Trade in educational services and international student mobility has

also increased tremendously in the past decade. Apart from the UK, the
traditional destination for most Indian students, other European countries have
also witnessed an increase in the uptake of Indian students (Mukherjee and
Chanda 2012). As with merchandise trade, migration and services trade also
involve networks, trade-creation effects, and preference effects. In this paper,
we will briefly examine some of these connections in the EU-India context in
the computer & information, education and entertainment sectors.

CHAPTER 1
History Of trade between India and European Union

India is one of the growing economies that will reshape the global economy in
the twenty-first century. Europe is the largest trading power. Both are involved
in key negotiations to boost trade and investment at the WTO and bilaterally
through an ambitious Free Trade Agreement.
The European Union is India's number one trade and investment partner. Twoway trade in goods and services totalled 86 billion in 2010 or roughly 235
million per day and has continued to expand in 2011 when the two-way trade
in goods alone reached 80 billion. Our bilateral trade has more than doubled
in the last decade and the EU remains the most important export destination of
Indian exports of both goods and services. Furthermore, as well as being the
main destination for Indian outward Foreign Direct Investment (FDI), the EU
is also India's most important source of inward FDI - after Mauritius providing a quarter of all inward flows since 2000, resulting in a total stock of
some 34 billion. For further information on bilateral trade in goods and
services as well as investment, please access the following Trade investment
Europe is the worlds largest trading bloc
The European Union brings together 500 million citizens and four of the
worlds seven largest economies. It is the world's largest exporter of
manufactured goods and services, and is the biggest export market for more
than one hundred countries. Alone, it accounts for one fifth of global trade.
Trade is the motor of Europes prosperity.
In this borderless Europe, people and products can move freely from one
place to another. The 27 Member States of the European Union share a single
market, a single external border and a single trade policy. European Union
Member States have agreed to pool their sovereignty and follow a common

policy on international trade. It means there is one negotiation, one negotiator

the European Commission and at the end of the process just one agreement
instead of 27 different sets of trade rules with each of Europe's trading
partners. The Commission also represents the EU Member States in the World
Trade Organisation.
Member States embassies in partner countries are in charge of export
promotion and offer a wide range of services to their national operators,
including helping them e.g. to know more about the Indian market; find local
contacts; carry out in-depth research on the market for their goods; or attend
trade fairs.

Overall Co-Operation framework between EU-India

In 2004 India became one of the few EU's "strategic partners". Since 2005,
The EU-India Joint Action Plan, revised in 2008, aims at realising the full
potential of this partnership in key areas of interest to India and the EU.
The EU and India have in place an institutional framework, cascading down
from the annual EU-India Summit held at heads of States and government
level, to a senior-official level Joint Committee, to the Sub-Commission on
Trade and to working groups on technical issues such as technical barriers to
trade (TBT), sanitary and phytosanitary measures (SPS), agricultural policy or
industrial policy. These are the fora where a number of day-to-day issues, such
as EU market access problems, are discussed.

A. EU Relations with India

The European Union and the Republic of India benefit from a longstanding
relationship going back to the early 1960s. The Joint Political Statement of
1993 and the 1994 Co-Operation Agreement, which is the current legislative
framework for cooperation, opened the door to a broad political dialogue,

which evolves through annual summits, regular ministerial and expert level
meetings.
In 2004 India became one of the EUs Strategic Partners (Joint Press
Statement. Since 2005, the Joint Action Plan which was revised in 2008 is
helping to realize the full potential of this partnership in key areas of interest
for India and the EU. Current efforts are centered on: developing cooperation
in the security field (in light of the EU-India Declaration on International
Terrorism ongoing negotiations for a Free Trade Agreement.
The Country strategy paper for India 2007-2013 (470 million in total a
yearly average of 67 million) concentrates EU funds on health, education and
the implementation of the Joint Action Plan, see also its Mid-term review. A
Memorandum of Understanding on the Multi-Annual Indicative Programme
(MIP) 2011-2013 was signed between the EU and India in February 2011. A
review confirmed the need to further support social sectors like health and
education, in particular secondary education and vocational training. For 20112013, the EU intends to fund fellowships for Indian students and professors
(Erasmus Mundus), as well as projects in the fields of energy, environment and
trade related technical assistance.

CHAPTER 2
Trade and investment with European Union

Airbus A320 passenger jet aircraft of flag carrier airline Air India
The Indian economy grew at more than 5% in the last quarter of 2014. IMF
economic forecasts for India predict 6.5 percent growth in the year through
March 2017 compared with Chinas 6.3 percent in the 12 months through
December 2016.
The European Union is India's second largest trading bloc, accounting for
around 20% of Indian trade (Gulf Co-operation council is the largest trading
bloc with almost $160 billion in total trade). India was the European
Unions' (9th Largest Trading Partner in fiscal year 2014-2015.
France, Germany and UK collectively represent the major part of EU-India
trade. Denmark, Sweden, Finland and the Netherlands are the other more
prominent European Union countries who trade with India.
EU-India trade in goods grew from 28.6 billion in 2003 to 72.7 billion in
2013. Annual trade in commercial services tripled from 5.2billion in 2002 to
17.9 billion in 2010.

Whilst EU-India trade had continued to progress in absolute terms for the past
several decades, the past couple of years have shown a decrease in trade:
bilateral trade declined to EUR 76 billion in 2012 and further still to around
EUR 73 billion in 2013. The European Union's commercial presence in India
has been dropping at an alarming rate: market-share in India for goods and
services from the European Union has fallen by more than 50% over the past
decade. EU-India trade in goods as a percentage of Indias total trade has
continuously declined going from 26.5 % in 1996-97 to 13.9 % in 2011-12 and
further to 13.2 % in 2013-14. In 2013-14, only about 11 % of Indian exports
and imports were to the EU.
Latest statistics indicate that India-European Union trade in goods and services
are on the decline. During the fiscal year 2014-2015, trade in goods dipped by
about 4 per cent to $98 billion while trade in services pulled-back by 2.5
percent to $26 billion in 2013. Annual EU investment in India more than
tripled between 2003 and 2010: going from 759million in 2003 to 3 billion
in 2010. (Note: A remittance to India by Indian Diaspora world-wide was
US$70 billion in 2013-14).

Corus integrated steel mill at Velsen-IJmuiden, Netherlands. Acquired by in

2007 by Tata steel
Jaguar Land Rover, the iconic British multinational car manufacturer was
purchased in 2008 by the Indian conglomerate Tata Group who is the largest
private-sector industrial employer in the United Kingdom. Several Indianowned companies have value-creating operations and manufacturing facilities
within

the

European

Union :

BeNeLux

(Crompton

Greaves, Binani

industries, Tata Consultancy Services, Jet Airways, Dishman Pharmaceuticals

and Chemicals), Poland (Videocon & Zensar Technologies), France (Bharat
Forge), Czech Republic (Infosys), United Kingdom (Dr. reddys Laboratories,
Tata Motors), Sweden (Tech Mahindra), Germany (Biocon), Italy (Mahindra &
Mahindra), Romania (Wipro).

CHAPTER 3
India-EU free trade agreement
The free trade agreement currently negotiated between the European Union
(EU) and India is due to be the first of a new generation of free trade
agreements between the EU and an emerging economy. This article addresses
a number of critical issues in the negotiations and the EUs response to them.
These issues include European labour standards and GATS Mode 4
liberalization; Indian generic medicine production and EU interests in patent
protection; EU agricultural subsidies and their impact on the Indian dairy
sector; the human rights and democracy dimension of the EUs foreign policy;
and transparency issues of the negotiation process.
The European Union (EU) has invested considerable resources to conduct and
finalize free trade agreement (FTA) negotiations with numerous trade partners,
most recently Singapore, Moldova, Georgia and Armenia. However, its
negotiations with large trading partners such as India, the focus of this article,
have been going on for a considerable amount of time and demonstrate that
concluding an FTA between large economic powers is not an easy task. India,
too, has been actively and rather successfully concluding FTAs, inter alia
with major economic powers such as ASEAN, Japan, Korea and Mercosur. Its
foreign trade policy is characterised by responsiveness to domestic policymaking by politicians and technocrats rather than to international forces. The
country has acquired the reputation of hard-line negotiator with a defensive
strategy, not easily giving in to trading partner demands. Additionally; India
has questioned the strategic power of the EU in Asia. Moreover, the EUs
political power may have constrained by increased global multi-polarity, a
growing economic nationalism, the financial and Eurozone crises and the
judicialisation of world trade. It seemed clear from the outset that the FTA
negotiations between the EU and India would not be a proverbial walk in the
park. This paper addresses a number of critical issues in EU-India
negotiations. We begin by describing the general relationship between the EU

and India and the economic potential of the FTA in order to parse out what is
at stake. Afterwards, we address some of the difficulties by highlighting the
following contentious issues raised by civil society stakeholders: (i) European
labour standards and GATS (the WTOs General Agreement on Trade in
Services) Mode 4 liberalization; (ii) Indian generic medicine production and
EU interests in patent protection; (iii) EU agricultural subsidies and their
impact on the Indian dairy sector; (iv) the human rights and democracy
dimension of the EUs foreign policy; and (v) transparency issues of the
negotiation process.

2 See for an overview of both concluded FTAs and negotiations: Government of

India, Trade Agreements, http://business.gov.in/trade/trade_agreements.php.
3 P. Ramdasi, An Overview of Indias Trade Strategy, (2010) Ides pour le Dbat de
lInstitut Du Dveloppement Durable et des Relations Internationales/Sciences Po
Paris

INTERESTS AT STAKE IN THE FTA TALKS

A. ECONOMIC POTENTIAL
Economically, India and the EU are vastly different countries.26 While Indias
population more than doubles the EUs, its GDP is almost a tenth of the EUs:
1.825 trillion USD versus 16.36 trillion USD. Indias agricultural sector is
comparatively much more important, but the domestic services sector also
accounts for more than half of national GDP. In the EU, services account for
71.8% of GDP. EU-India trades were worth nearly 80 billion euro in 2011, and
shrunk to 75 billion in 2012. While India is currently Europes ninth trade
partner, the EU is Indias largest trading partner.
Although Indias average tariff dropped from 79% in 1990 to 17% in 2005,
current tariffs are still high when compared to the EUs average tariff (2%).
Moreover, there are substantial non-tariff barriers to trade with India. At the
same time, Indian exports face up to the heavily regulated European market,

this is complicated by divergences in the regulatory framework between EU

Member States. Research commissioned by the Commission into the potential
economic effects of an EU-India FTA showed that both parties exports would
be boosted: Indian exports as a result of a depreciation of its currency
following an increase in trade, which would reinforce the competitiveness of
Indian producers; EU exports from better access to the Indian market.
Moreover, each partners market share in the others market would increase.
Furthermore, simulations showed that because of the comparatively higher
level of protectionism, Indias market opening would be significantly greater
than the EUs. However, while the EUs terms of trade would improve
drastically, their gains would be limited as India is not one of the EUs largest
trading partners; the EUs lesser liberalisation would prove more favourable
for India as the EU is Indias largest trading partner.
A second commissioned report concluded that trade diversion is a serious
risk when an FTA does not provide for substantial, deeper integration; in the
case of a more profound FTA, technological changes, spill-overs between
companies, niche specialisation and economies of scale can provide substantial
gains. 33 Moreover, in line with the aforementioned objectives of the FTA,
positive effects of deeper integration is more likely to clearly benefit both
parties.
B. EUROPEAN AND INDIAN TRADE INTERESTS
The 2010 follow-up communication of the Commission to the Global
Europe Strategy, Trade, Growth and World Affairs, sums up the broad lines
of the EU external trade agenda: Cutting tariffs on industrial and agricultural
goods is still important, but the brunt of the challenge lies elsewhere. What
will make a bigger difference is market access for services and investment,
opening public procurement, better agreements on and enforcement of
protection of IPR (intellectual property protection), unrestricted supply of raw
materials and energy, and, not in the least, overcoming regulatory barriers
including via the promotion of international standards.
Moreover, according to the Commission, the economic progress of
emerging economies such as India is attributed to growing trade and
progressive liberalisation. As a result, millions of people were lifted out of
poverty and a growing middle class was created. Nevertheless, the
Commission notes that the success of these economies is also partly the result

of unnecessarily high barriers to EU exports while with the benefits of

liberalisation also come responsibilities, such as helping to maintain a global
regime based on openness. Thus, the EUs rejection of protectionism at home
must be accompanied by activism in creating open markets and fair conditions
for trade abroad.
As concerns India, and in consistency with the aforementioned
economic analyses, the EU will seek the reduction or abolition of nontrade
barriers in addition to traditional tariff reductions. Examples of such non-tariff
barriers include: quantitative restrictions; import licensing; mandatory testing
and certification for a large number of products; complicated and lengthy
customs procedures; sanitary and phytosanitary measures on mineral water
and live cattle and poultry; reciprocity concerning temporary admission of
products in transit; and market access restrictions to the Indian banking, retail
and government procurement sectors.
In short, the EUs interests in an FTA with India underline the core
arguments of the external policy of the Global Europe Strategy: creating
market access through the lowering of non-tariff barriers, allowing access to
resources and tapping into new areas of growth such as intellectual property,
services, investment, public procurement and competition. On the other side of
the table, Indian goals and objectives in the FTA negotiations are to be seen in
the light of the economic developments in the region. Asia is in a process of
economic integration and there are many FTAs at different stages of
completion. Such integration might mean that in the future, the EU could face
more challenges to establish a presence in those countries. India is also looking
for new markets in Asia, Africa and Latin America and, in order to counter the
effects of the global financial and economic crisis, it has developed a strategy
called the Focus Market Scheme aimed at decreasing its reliance on traditional
markets like Europe and the United States. Furthermore, if the EUs bilateral
approach with regard to ASEAN members proves successful (as appears to be
the case); India may want to assess how preferential the FTA with the EU will
be, as it will face competition from these countries within the EU market.

CHAPTER 4

Type of goods India Trade with Europe

European Countries account for about 20% of Indias total trade. During 200910 (April September), Indias trade with Europe decreased by 31.7% as
compared to the corresponding period last year with export declining by 30.9
% and imports by 32.28%. The top five items of Indias exports to Europe are
Ready-Made Garments Cotton Including Accessories, Petroleum (crude &
products), Gems & Jewelry, Machinery & Instruments and Cotton Yarn,
Fabrics and Made ups. The top five items of Indias imports from Europe are
Machinery (except Electrical & Electronics), Pearls/Precious & semi-precious
stone, Electronic Goods, Transport Equipment and Iron & Steel. Trade
between India and Europe during the last five years

Trade with Europe

(Value in US $ millio0n)
Year

Exports

Imports

Total Trade

Balance of Trade

2005-06

24716

30145

54861

(-) 5429

2006-07

28870

40117

68987

(-) 11247

2007-08

37239

51600

88839

(-) 14361

2008-09

42,076

57262

99338

(-)15186

2008-09 (April-Sept)

23730

35015

58745

(-)11285

2008-09 (April-Sept)*

16406

23712

40118

(-)

(A) Trade and Investment Relations with European Union

The European Union (EU) presently consists of 27 countries viz. Austria,
Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak
Republic, Slovenia, Spain, Sweden and U.K.

The EU, as a bloc, is Indias largest trading partner and accounts for about
18% of Indias exports and imports. The relationship between the EU and
India has matured substantially in recent years, from that of aid donor and
recipient, to one of partnership with opportunities for mutual benefit. Today,
the EU and India, as the global actors in a multi-polar world, share a strategic
partnership, of which commercial interaction forms a key component. The
frequency and intensity of Indias contacts with the EU have grown
exponentially since 2000. Indias engagement with EU in trade in goods has
increased by more than three times between 2000 and 2008.

Approvals for Foreign Direct Investment (FDI) from EU Member States

during the period August, 1991 to October, 2009 were of the order of US$ 23.3
billion. UK, Netherlands, France and Italy are the major sources of FDI that
has been approved. The share of EU in total FDI inflows in India is 18.75%.
Top sectors attracting FDI inflows from EU (from April 2008 to October 2009)
are Services Sector, Automobile Industries, Housing and Real Estate,
Chemicals (other than Fertilizers) and Construction Activities. As far as
technology transfer is concerned, 3807 technical collaborations have been
approved with EU countries during August, 1991 to September, 2009.

India and EU have enjoyed healthy economic relations. These relations have
been built on the foundations of (i) India-EU Cooperation Agreement on
Partnership and Development which came into effect in August, 1994, (ii)
India-EU Strategic Partnership Agreement (iii) Agreement on Scientific and
Technological co-operation , 2002 (iv) Agreement on Customs Co-operation,
2003. India also has bilateral framework Agreements with a number of
individual EU countries in areas of trade, investment and avoidance of double
taxation. India has agreements for investment promotion and protection with
22 countries of Europe, including 16 countries of EU. Similarly, agreements
for avoidance of double taxation exist with 26 countries of Europe, including
20 countries of EU.

India-EU bilateral relations are periodically reviewed at the official level by

the India-EC Joint Commission, which had its last meeting on 28th October,
2009 in New Delhi. Three Sub-Commissions on Trade, Economic Cooperation
and Development Cooperation and nine Joint Working Groups on agriculture
and marine products, textiles, information technology & communications,
consular

matters,

environment,

steel,

food

processing

industries,

pharmaceuticals & bio-technology and TBT/ SPS issues are functioning. The
Sub-Commission on Development Cooperation met on 16th July, 2009 at
Brussels. The meetings of Sub-Commission on Trade and Sub-Commission on

Economic Cooperation were held on 24th September, 2009 and 16th October,
2009 respectively.

Indias trade with the EU is hampered by sanitary and phytosanitary standards,

technical barriers, complex system of quota/tariff, use of anti-dumping/antisubsidy measures against Indian products. These issues which have a bearing
on market access for Indias exports to the EU are regularly taken up in the
Joint Working Groups and Sub-Commission on Trade. The EU market has
stringent quality norms and standards. Indian trade and industry need to meet
these norms to increase the market share of Indian products in EU. Issues
affecting trade with individual European countries are also taken up at the
bilateral fora in the form of Joint Commissions. This continuous dialogue
helps in creating an environment for enhancing bilateral trade and investment
flows. During the year 2009, Joint Commissions meetings were held with
Belgium-Luxembourg (BLEU), Italy, Finland, Austria and Turkey. At the 10th
India-EU Summit held on 6th November, 2009 in New Delhi, India and EU

recognised the importance of an effective multilateral system, as a key factor

in tackling global challenges. They also considered climate change as one of
the most important global challenges, and called for strengthening the ongoing
global recovery through inclusive and global approach. Both sides underlined
the importance of financial services reforms that have been implemented in
India, and reconfirmed their adherence to the G-20 commitment to refrain
from adopting protectionist measures in all its forms covering trade in goods
and services, investments and financial flows. The Importance of successfully
concluding multilateral negotiations at the WTO in 2010 was also underlined.
EU and India confirmed the shared objective of concluding an ambitious and
balanced Broad Based Trade and Investment Agreement, which will bring
significant economic benefits to both sides and further strengthen the bilateral
and economic relationships. The EU and India took note of the progress made
so far and agreed to intensify the negotiations with a view to concluding the
Agreement as swiftly as possible.

India is currently negotiating with the EU for concluding a Broad-based Trade

and Investment Agreement (BTIA). The India-EU negotiations on a broad
based Trade and Investment Agreement (BTIA) which commenced in June,
2007 continued during the year. Eight rounds of negotiations have been held so
far. The sixth and seventh rounds were held in New Delhi and Brussels in
March, 2009 and July, 2009 respectively and the 8th round was held during
January 2010, during which both sides engaged in substantial discussions on
Trade in Goods, Rules of Origin, SPS and TBT, Trade in Services, Investment,
Dispute Settlement, and Intellectual. Property Rights, Trade Facilitation and
Competition. These discussions have enabled a clearer picture emerging on
areas of convergence and on sensitivities of both sides.

In order to strengthen the trade and investment relations with European Free
Trade Association (EFTA) countries comprising Switzerland, Liechtenstein,
Norway and Iceland (non-EU member countries in Europe), an India-EFTA

Joint Study Group (JSG) was established in December, 2006 to take a

comprehensive view of bilateral economic linkages, covering among others,
trade in goods and services, investment flows, and other areas of economic
cooperation and to examine the feasibility of a bilateral broad based trade and
investment agreement. The JSG recommended commencement of negotiations
for a broad based Bilateral Trade and Investment Agreement. Based on this,
the negotiations commenced in October, 2008. Continuing with the efforts of
the previous years to strengthen the trade and investment relations with EFTA
countries, four rounds of negotiations have been held so far. The fourth round
of negotiations was held from September 22-24, 2009. Prior to this, an Experts
Meeting was held in Geneva during August 19-20, 2009.

India-Serbia Joint Economic Committee (JEC) has been established under an

Agreement on Trade and Economic Cooperation between the Government of
the Republic of India and the Council of Ministers of Serbia and Montenegro,
signed on 7 February, 2006. The first meeting of the JEC was held in New
Delhi on 2 April, 2008. The 9th meeting of India-Croatia Joint Committee on
Trade and Economic Cooperation was held at Zagreb, Croatia during 5-6
March, 2009. The seventh session of the Joint Committee of Trade and
Economic Cooperation between India and Slovenia took place in Ljubljana on
29th September, 2009.

The first meeting of India-Turkey Joint Study Group (JSG) to explore the
possibility of a Free Trade Agreement (FTA) between India and Turkey was
held in New Delhi on January 6-7, 2010. The important points discussed in the
meeting included bilateral economic linkages; existing regional trading
arrangements of both countries with their respective trade partners; broad
structure of the report of JSG; and detailed structure of each chapter of the
report. It was agreed that JSG report would be finalized before December,
2010. Accordingly a work programme for the JSG was also worked out. The

sixth meeting of India-UK Joint Economic and Trade Committee (JETCO)

took place in London on 4th February, 2010

A. Growing Merchandise Trade Integration between EU and India

During eighties, Indias export basket had a considerable presence of the
Soviet Bloc and Eastern European countries (Nachane and Ranade, 1996).
Only from mid-nineties onwards, the importance of EU countries started
increasing in Indias trade basket. In 2009, Indias exports to and imports from
EU stood at 25.4 and 27.5 billion respectively. The recent increase in IndoEU trade is fueled by the growing trade relationship with both EU 15 as well
as the newer EU members, many of which belonged to the former Soviet Bloc.
The increase in trade volume has occurred both in intermediate goods and final
products, indicating possibilities of deepened intra-industry trade as well. The
relative presence of EU and India is each others market provides interesting
insights. EUs presence in Indias trade basket and vice versa. It is observed
from EU 15s presence in Indias export and import basket has decreased
considerably over 1995-2010 (Chakraborty, 2012). The decline is in line with
Indias growing trade with West Asia and East Asia as a result of increased oil
imports and the Look East Policy respectively. The decline has been sharper
for imports, given Indias growing import of energy products from oilexporting countries. Nevertheless, EU as a whole remains as the largest trade
bloc partner of India. Interestingly, India is witnessing an increasing trade
association with the new EU Member countries (EU 12) as well, in particular
in the area of exports since 2006. On the other hand, shows that Indias
presence in EU 15s trade basket has improved over the time, but still remains
at a marginal level. A similar conclusion concerning new EU member
countries emerges by looking at Indias trade shares from the same diagram.
Clearly both EU and India hold considerable scope for enhancing the
penetration in each others market through the formal trade agreement.
The importance of India for individual EU member countries and vice versa
can be understood and indicates that in line with the macro trend, the share of

individual EU member countries barring exceptions like Netherlands are

declining in case of exports. Indias share in EU member countries on the other
hand is showing an increasing trend over the years, although the figure is at a
modest level. It can be argued on the basis of the observation that both EU and
India stand to gain by enhancing presence in each others market.
One major concern to be addressed during the negotiation of any trade bloc
is however the domestic oppositions fueled by the fear of potential losses. The
current trade balance pattern provides an indicative scenario in this regard.
While India has trade deficit vis--vis EU-15, it enjoys a surplus with respect
to EU-12 countries. The aggregate trend is repeated at the country-level
scenario as well, as India enjoys surplus with respect to several EU 12
countries. Indias trade deficit with the EU 15 countries on the other hand can
be explained by their heavy imports of machinery and appliances, electrical
machinery and equipments, chemical products, iron and steel products,
precision equipments etc. from the latter. On the other hand, India enjoys
trade surplus with respect to EU 12 countries, given its export of automotive
products, textile fibers and clothing products, iron and steel products,
pharmaceutical products, machinery and appliances etc. to these markets and
the limited diversity of the present import basket from them
Interestingly, Indias trade complementarities with the newer EU member
countries reveal an increasing trend for exports, while the same for imports
show a decreasing trend. The result suggests that, EU export and Indian import
demand has shown divergence over 1995- 2002, but greater similarity has been
noticed in the following period. The result underlines Indias export interest to
partner EU through BTIA on one hand, and the EU urge to negotiate hard for
greater access in Indian market on the other.

CHAPTER 5
EU-India Association on Trade in Services

The EU 15 countries have long evolved as a major provider of tech-intensive

professional services. Conversely, the EU 12 countries are on the learning
scale for the professional service categories on one hand and are evolving as
major providers of travel and tourism services on the other. India is arguably
located somewhere in between, as the country since nineties has moved from
provision of traditional labour-intensive services to higher skill-intensive and
innovative tradable services. It is observed from International Trade Statistics
data on services trade that both EU and India holds a trade surplus in this
category. However, the EU 15 countries are recently witnessing a decline of
their share in global services exports; arguably owing to labour cost
disadvantage. On the other hand, India as well as EU 12 countries are
witnessing an increase in their global presence.
Global Services Export and Import shares of EU 15 Countries, Global Services
Export and Import shares of EU 12 Countries and India. The category-wise

market share of EU 27 and India in commercial services is reported in in the

following. It is observed from the table that EU countries are currently the
leading players in case of all three service categories, namely transportation,
travel and other commercial services. On the other hand, India is still a
marginal player in case of transportation and travel service exports, but has
evolved as a major service provider in case of other commercial services. In
particular, export of computer and IT- related services and professional
services have evolved as a major item in Indias services export basket.
The trade in services between EU and India has increased continuously over
the last decade, with Indias services imports from EU reaching 8.6 billion in
2009, while the corresponding figure for exports stood at 7.4 billion. The
Indian services import from the EU mainly occurs in the area of financial
services, professional services, travel services etc. On the other hand, Indian
interest in the EU market has been mixed, as export earnings from all types of
operations, e.g. - export by BPO units, tourism, setting up of subsidiaries
through investment and movement of professional service providers have
increased over the period. For instance, inflow of medical patients from
European countries to India has gradually increased (Chakraborty and
Dilwaria, 2011). Similarly, several acquisitions by Indian software players in
EU countries in the post-recession period have been reported (Sinha, 2010).
The growing concern for India in the post-recession period has however been
the stringency on several fronts, especially in the area of Mode 4 (HT, 2010).
The EU-India Summit Joint Statement at Brussels (2010) tried to respond to
Indias concern by noting, Recognizing the important implications of the
movement of people for India and EU, they agreed to explore initiatives that
could lead to a regular, comprehensive and structured dialogue on migration
issues, with a view to deepening cooperation in this field (EU, 2010). The
services negotiation with the EU as part of the BTIA holds a major opportunity
for India, as the deadlock at the Doha Round lowers the market access on
outward movement of Indian professionals, namely software engineers,
doctors and nurses etc. both to the developed and developing countries. EU
being a major importer of all types of services holds a major opportunity for
Indian exporters. Indias major requests to the EU are concentrated in the area
of recognition of the qualifications, training and professional standards of

Indian service providers; removal of market access limitations; creating a

transparent and objective visa and work permit regime with easier and faster
renewal procedure; ensuring a mechanism to find out the causes of visa
rejection and requirements to be fulfilled etc. Another major agenda of India is
to ensure that the EU practice to link investment issues under Mode 3 with
movements of professionals under Mode 4 is discontinued. The sector-wise
Indian requests to the EU on trade in services are noted in Annex 1. It is
expected that the Indian concerns raised to the EU from time to time will be
responded to in the final BTIA.

EU-India "trade in goods" statistics

Trade in goods 2012-2014, billions

Year

EU imports

EU exports

Balance

2012

37.5

38.5

1.0

2013

36.8

35.8

-1.0

2014

37.0

35.5

-1.6

EU-India "trade in services" statistics

Trade in services 2011-2013, billions

Year

EU imports

EU exports

Balance

2011

11.1

11.9

0.9

2012

12.6

11.7

-0.8

2013

12.2

11.5

-0.7

CHAPTER 6
Challenges in Trade with the European Union.

Europe in 2015: Uncertain, Uneven and Unpredictable. The sick man of Europe may
very well be all of Europe. Since the Great Recession of 2008-2009, growth
has been generally slow and painful, and the danger of prolonged stagnation in
Europe is a very real possibility. The euro has dropped to its lowest value in
nine years. With Europe accounting for 25% of global trade, its recovery is
imperative to the health of the global economy. The forecast for 2015 is
looking dismal, only marginally better than 2014.
Wharton management professor and director of The Lauder Institute. The
continent is facing a deceleration of the German economy. Southern Europe
is not working as it was supposed to and there are lingering problems with
high unemployment and high taxes, Guillen adds.
Unless there is a decisive change in structural, fiscal and monetary policies,
Europe may continue to languish in the upcoming year, according to the
Organisation for Economic Co-Operation and Development (OECD). Europe
is at the centre of `weakness in the global economy, says Catherine L. Mann,
the OECDs chief economist. The institution forecasts growth in the Eurozone
to be just 1.4% in 2015. Thats an improvement over the low 0.7% for 2014,
but its well below what Europe should be achieving.
Last year, the overall world economic growth rate stood at 3.1%. And Mann
points out that the global rate is still below the 4% average between 1995 and
2007. She explains that with the burgeoning sizes of faster-growing emerging
economies, world GDP should be expanding faster not slower than past
norms. Investment and trade globally have yet to pick up to full steam.
Mario Draghi, president of the European Central Bank (ECB), has announced
that he is preparing to change course to resuscitate the Eurozones fragile and
uneven economic recovery, possibly with quantitative easing measures, a
strategy that Europe has previously shied away from. Since the last half of
2014, the ECB has adopted a variety of measures to stimulate bank lending.
The real question is how far can they go and how effective will it be,
says Joao F. Gomes, a Wharton finance professor.

By having several countries drastically reduce their deficits all at the same
time, growth was undercut and the adjustment has been incredibly painful. Its
a Catch-22, note Olivier Chatain, strategy and business policy professor at
HEC business school in Paris and senior fellow at Whartons Mack Institute
for Innovation Management.

Frankly, its very hard to be optimistic about Europe. There are lots of
issues.Mauro Guillen
Low inflation and deflation are becoming major problems, Chatain notes.
The inflation rate has been very far below the European Central Banks 2%
target for a very long time, which makes debt consolidation much more
difficult. Inflation has stayed precariously low, hovering at 0.3%. Spain and
Greece have actually been in deflation, a trend that could spread to the rest of
Europe.
Unemployment in Europe, with the exception of the U.K., is in the double
digits and not forecast to drop until 2016. According to Mann, Consumer
spending and investment have consistently failed to pick up, leaving Europe
with high unemployment and weak tax revenues. On the positive side,
Chatain points out that the activity rate of adults who can work is actually
much better now as good as it in the U.S. than it was in the 1990s.
However, within Europe, countries with very different personalities are
contributing to an unsteady recovery effort that is affecting the entire
continent.

CHAPTER 7
Future Scope and achievements in trade with European Union

On 23 February 2015, the Indian Ministry of External Affairs (MEA)

published a paper summarizing the current status of engagement with the
European Union, listing India's national priorities, stating its core interests and
outlining the direction and contours for the future EU-India relationship:

Safeguarding Indias territorial integrity, its economic & trade interests,

nurturing its civilization heritage and enhancing its strategic space.

Creating conditions in our immediate neighborhood so as to facilitate

channelizing a large part of our resources to health, education, environment and
other vital social areas;

Developing our international political relationship to extend our interests in ever

widening concentric circles, thus enabling the full harnessing of our political,
economic and technical resources.

India views the ongoing global power shift from the Atlantic to the Indian
Ocean as an opportunity to lift billions of persons out of extreme poverty and
a March to modernity. Indians, observing the Chinese geopolitical ascension,
have concluded their country can only be taken seriously in 21st.century world
affairs if it can speak from a position of economic strength. Investors and
companies have been encouraged to tap the aspirations of the 1.2 billion
strong. Indian market for goods & services and profit from Indian Ocean
Trade through the make in India initiative launched by the Government of
India. The challenge facing India is to successfully leverage the country's
youth dividend towards achieving the Indian century and to avoid hubris that
India's economic growth is inevitable.
The European Union, still reeling from the combined effects of the global
economic slowdown, European sovereign debt crisis, a re-assertive Russia and
several high-profile corporate scandals; appears rudderless in trying to find
solutions to reverse the surge of Euroscepticism and anti-globalization
movement. Uncertainties in Brussels over the future state of the European
Union are directly reflected in EU-India relations. Europe-wide acceptance of

Germany's leadership role of the European Union hangs in the balance after
widespread dismay at the rigid political stance adopted by the German
government and perceptions that the harsh conditions which Germany sought
to impose upon Greece during the Greek sovereign debt crisis were
overbearingly punitive. Portrayal of Germany as a normative model of
honesty, efficiency and ethics (incessantly repeated by German officials, mass
media and private citizens during the Greek sovereign debt crisis) came
undone following revelations of fraud at a global level on an industrial scale
by Volkswagen. Time Magazine termed the actions of Volkswagen as
"superbly engineered deception, with 11 million VW diesel cars fitted with
special software that enabled them to cheat on emissions tests German industry
was supposed to be above this sort of thingor at least too smart to get caught."

CASESTUDY

1. EU-India Civil Aviation Cooperation Programme

Context: Aviation is seen as important by the EU both because of its trade
facilitation role and because of its business potential in its own right. It is also
a sector where the EU can add value from its own extensive experience and
lessons learned in regulation and operation. The EU-India Civil Aviation
project is the EUs biggest economic cooperation project in India and has been
in operation for the past 5 years.

Objectives
To improve regulatory links and safety
To facilitate business links
The project's main method is investment in human capital Impact:

What has been achieved?

Increasing awareness of EU industry practice and safety standards - New
regulations CAR 21 & CAR 145 implemented - Working links between Indian
and EU authorities (DGCA & EASA) created - Helicopter safety improved
Supporting the development of local air transport companies - 20 airlines
created in 6 years - Decision taken to create an MBA in airline management
Providing technical assistance to Indian Air Traffic Management - Air Traffic
controller licensing in progress
Providing training on the development of airports infrastructure - Aerodrome
licensing in progress - Assisting in pilot training

 Stimulating collaboration between Indian and European aerospace

manufacturers - SARAS flight test protocol implemented - Joint Ventures
concluded between European and Indian industries
Developing local knowledge and practice of modern product support,
maintenance and overhaul techniques - DGCA academy set up - Joint Ventures
concluded between European and Indian industries

2. The European Union faces the dual challenge of developing adequate

standards for genetic testing while bridging national, social, and linguistic
differences. Accordingly, the best description of the current quality
assurance situation in the European Union is one of fragmentation;
national policies differ widely on areas such as requirements for laboratory
accreditation, clinical genetic requirements, and novel genetic test
evaluation. Given the number and diversity of countries in the EU, it is
understandably difficult to come to a consensus about how to synchronize
quality assurance of genetic tests. The challenge for Europe appears to be
one of harmonizing standards, so that not only are all genetic tests in the
EU held to certain minimum standards, but laboratories performing genetic
tests can also collaborate on issues such as best practices and rare genetic
diseases across national borders.
The scope of genetic tests within the European Union is itself unclear. A recent
search on the European Directory of DNA Diagnostic Laboratories
(EDDNAL) found 353 laboratories performing diagnostic tests (as of June
2004), but a survey performed by the European Commission's Institute for
Prospective Technologies (IPTS) for their seminal report, Towards Quality
Assurance and Harmonization of Genetic Testing Services in the EU, suggests
that the number may be much larger. A lack of knowledge about the number of
patients having tests performed across Europe is also acknowledged; however,
the EU survey makes clear that genetic services and their usage are growing in

the European Union. Largely, these tests are for monogenic (or single-gene)
disorders, and their type is determined mostly by the genetic illnesses that are
most prevalent within the community in question.
Quality assurance within genetic testing laboratories is guided largely by a
network of external quality assurance providers, which provide laboratories
with genetic test samples and feedback based on the laboratory's analysis of
the sample, both in the form of individual reports and group feedback that can
lead to standardized guidelines. These providers vary in the number of tests
schemes (programs that test laboratory proficiency by examining testing
results on a standardized sample) available and geographical scope
The European Commission's European Molecular Genetics Quality Network
(EMQN) and the Cystic Fibrosis Thematic Network are among the largest
providers, and both have received funding from the EU. The EMQN was
funded by the EC until 2002 (the CF network is still funded), but participants
in EMQN external quality assurance schemes continued to increase through
2003 despite the end of funding from this source. Participating EMQN
laboratories now pay fees.
The gaps in the regulation between EU countries can be fairly wide. For
example, in the United Kingdom, considerable groundwork had been
established for the protection of quality in genetic tests; the Human Genetics
Commission (HGC) and the Former Advisory Committee on Genetic Testing
(ACGT)have made significant recommendations related to genetic testing
oversight. The United Kingdom National External Quality Assurance System
(UK NEQAS) is a major external quality assurance provider, and serves
laboratories both inside and outside the United Kingdom. Additionally,
the Clinical Molecular Genetics Society (CMGS) has developed a set of
substantial quality assurance and best practice guidelines, upon which the
EMQN based its preliminary quality assurance strategies. However, there are
several other European Union nations, such as Spain and the Slovak Republic,
that have no specific recommendations or best practice guidance for genetic
testing. It is unclear exactly why, however, these discrepancies exist.

Challenges
The Organization for Economic Co-operation and Development's (OECD)
report, Genetic Testing: Policy Issues for the New Millennium noted what
seems to be the prime concern in genetic testing quality assurance: the lack of
laboratory regulation, and the low numbers of laboratories participating in
external quality assurance schemes in the EU. A second survey performed by
the IPTS in its report notes that those laboratories participating in external
quality assurance schemes may participate in very few schemes. Because these
schemes are not compulsory, there may be little impetus for a laboratory to
participate, particularly if they are costly, since participation in the external
quality assurance programs can require membership or testing fees.
Additionally, there are concerns about inadequate or non-existent genetic
counselling of patients and tests that do not meet standards for clinical validity
and utility.
Concerns have also been raised about inadequate coverage of rare genetic
disorders, which can occur too infrequently for a single laboratory to develop
standards specifically for detecting and reporting these genetic abnormalities.
To address this issue, samples are often sent to laboratories in another country
where facilities do exist. However, because of discrepancies between
laboratories within EU member states regarding quality, reporting, and
payment mechanisms, it may be difficult for samples to be examined in a
different country. An additional concern, related to the testing of rare disorders,
is the regulation of test made in-house by clinical laboratories, or proprietary
laboratory tests, which are often the only kind of tests for rare genetic
ailments. Currently, tests that are manufactured outside the laboratory are
subject to regulation under the In-Vitro Diagnostic Directive 98/79/EC;
however, there is ambiguity as to whether tests developed in-house are subject
to the same regulations.

Solutions
The IPTS, the European Society of Human Genetics (ESHG), and the
European Commission's Expert Group on Genetic Testing have all expressed

the need for harmonizing quality standards within genetic testing. As

previously stated, there is little information about which laboratories perform
which tests, so it is quite clear that a comprehensive network of laboratories
still has yet to be formulated. The OECD and the IPTS have noted that current
external quality assurance measures could be augmented through the
expansion of current programs, and that an overarching harmonization of
regulation would help in the exchange of information and samples across
borders. The IPTS recommends the development of a European "platform" to
maintain quality across the EU member states that would set up a minimum
standard for genetic testing laboratories and both the ESHG and the EC Expert
Group on Genetic Testing suggest further regulatory framework for quality
assurance with genetic testing. However, how this expansion is to take place,
which would be responsible for its management, and the details of its
mechanism have not been fully articulated.
The ESHG and the EC Expert Group make further recommendations related to
the rights of the patient, stressing issues of informed consent, protection of
medical information (including genetic material), children and genetic tests,
and the expansion of counselling. Though it is somewhat harder to quantify if
and where failures in protecting these rights are taking place, they too are
central to maintaining quality assurance.

3. EUROPEAN UNION
Since the integration of the European Union, the European Commission has
put in effort in leading Europe to meet the upcoming climate challenge. While
the world is anticipating the global climate change conference in Copenhagen
in December this year, in which the world leaders are expected to reach a
compromised commitment like the Kyoto Protocol, the European Union has
implemented several major policies in her 27 member states to combat
changing global climate (ROSENTHAL, October 14, 2009).

The EU has three main goals for 2020:

1. Reduce greenhouse gas emissions by 20%, compared to the 1990
levels.
2. Increase the use of renewable energy from the current 8.5% to 20%
of the total energy output (Targeted renewable energy sources includes wind,
solar and biomass energies)
3. Reduce energy consumption by 20%, compared to the anticipated
2020 levels, mainly achieved by enhancing the energy efficiency
(Commission, 2009).
To achieve these three ambitious goals, the EU has implemented a few
major climate policies.
The first goal, which is to reduce carbon dioxide emission, will be
achieved mainly by further decreasing the carbon emission allowance for the
major carbon emitters (e.g. power plants, oil refiners) under the European
Union Emission Trading Scheme (EUETS). For transportation means, the EU
governments will continue to encourage the use of sustainable biofuels.
Emissions Reductions
The European Union Commission implemented the EUETS in 2005 in
response to the Kyoto Protocol. The scheme was implemented in the 27
member states of the European Union (EU), including nations like France,
Germany and the United Kingdom. This is by far the second largest multinational and emission trading scheme in the world, after the Tokyo Protocol.
The first trading phase was conducted during 2005-2007 while the second
trading phase will end by the year 2012 (Commission, 2009).
The cap-and-trade concept behind carbon trading is very simple. The
government determines the maximum amount of carbon dioxide allowed each
year and distributes allowance accordingly to different large emitters such as
power plants, oil refiners, transport services provider and other manufacturing
industries. The enterprise can trade the allowance in the carbon trading market.
With higher level of implementation of green technology in the factory, the
enterprise can sell its quota to his counterparts, thus gaining capital for

research and development in their products. On the other hand, the industries
that do not utilize green technology will suffer from the increased cost. It was
believed that carbon trading will provide a strong financial incentive for the
industries to go green, thus achieving the aim of carbon emission reduction
(Programs, 2008).
The first similar idea was implemented in the US in 1990, which is the
Sulphur dioxide emission trading scheme. The largest emission trading scheme
at the moment is the Kyoto Protocol, which was signed in 1997 and enforced
since 2005. There are also several economy systems in the world that has a
carbon trading market, namely Australia, New Zealand and European Union.
By 2009, carbon trading and carbon market is already a vigorously emerging
market, especially in the US and EU. The effect of the policy varies according
to different districts, mainly depending on the pillar of industries in the area,
the level of green technology before implementation of the carbon trading
policy and other facts (Programs, 2008).
Economists and environmentalists were divided when they looked at
the policy. The former believed that the scheme would weaken EUs
industries, especially heavy industries like the aluminum refining and
automobile factories, because carbon trading means incurred costs for some
industries and will eventually reflect in the price of the products.
Environmentalists believed that carbon trading provided very strong incentives
for the European industries to implement green technology and carbon trading
is by far one of the most effective way for the government to monitor carbon
emission without too much government intervention in the market (Programs,
2008).It was also revealed that in the first phase of carbon trading, over
allocation was problem. The number of allowances distributed to installations
in 2005 was 4% higher than the total EU cap. The statistics show that the price
of carbon decreased continuously.
Because there was no accurate data released for the period before
2005, which is the year before the scheme was implemented, no conclusion
can be drawn in how effective this scheme was to reduce carbon emission
from the area. However, according to the rough figures collected in a haste by

the government, which was also questioned to have the trend of overestimating
because it will be used to determine the allowance in the coming trading
phase, it was found that the EU-wise carbon emission has decreased for 4%
compared to the projected carbon emission baseline.

FINDINGS & CONCLUSION

The India-EU, as a bilateral trade body, has done well and the DSB, as a quasijudicial mechanism, has also worked reasonably well and contributed to the
strengthening of the WTO rule-based regime. However, the DSB do not have
powers to go beyond the WTO law that already exists. Many developing
countries believe that the existing law in itself is not fair and just as it should
be. Therefore, it is debatable whether the WTO dispute settlement mechanism,
particularly the DSB is capable of ensuring a level playing field and to deliver
justice in the broader sense of the term, or to ensure justice on the narrow
sense of applying and interpreting the existing body of law as objectively,
independently and impartially as possible. Major changes in the WTO law, in
line with the Doha Declaration, are desirable to enable the DSB to play as a
real international trade court capable of promoting and ensuring fairness and
justice for developing countries.
The multilateral trade system that has been developed in the India-EU is based
on the principle that all countries are to benefit from a rule-based system that
treats all countries equally. When all countries are treated equally, the
prerequisites for transparency, predictability and consistency are strengthened,
at the same time as the risk of trade distorting measures is reduced. In reality,
however, differentiation between the developing countries is almost the rule,
rather than the exception, in all other international trade arrangements.
Accordingly, there is an apparent contradiction between the principle of nondiscrimination and equal treatment in the WTO, on the one hand, and rather
arbitrary differentiation between the countries in different bilateral and
regional trade arrangements, on the other hand. These contradictions are
becoming more apparent with the expansion of the multilateral trade system,
the accession of more developing countries to the WTO, as well as the greater
interest in different development-related issues. It is in this context that the
Doha Development Round offers an opportunity to identify and develop more
relevant and objective criteria as a basis for a new differentiation between the
Developing countries, as well as between the developing and the developed
countries, in the EU. This study presents an approach to a new differentiation
between the developing countries in the EU, together with new and more

appropriate SDT provisions, in the field of agriculture. This presentation is

mainly based on empirical data, as well as certain relevant studies on the
subject. The purpose of this study has mainly been explorative, and the
document is, accordingly, not intended to serve as a basis for future
negotiating positions.
From the above research on Trade between India-EU it was observed that:
1. The developing countries that put emphasis on the risk of preference erosion,
i.e. mainly the LDCs and the food insecure countries, could, with the support of
a new differentiation, be compensated through: duty free market.
2. More advanced developing countries export to other developing countries
3. There is no established convention for the designation of developed and
developing countries or areas in the United Nations system
4. A developing country may require for a faster procedure to be used in a dispute
or a longer time to deal with a dispute.
5. The EU does not apply any established definition of developing countries.
6. The EU explanation does not address the fundamental causes for nonparticipation of developing countries in its dispute settlement mechanism.

RECOMMENDATIONS AND SUGGESTIONS

1. The FTA agreements include numerous provisions giving developing and leastdeveloped countries special rights or extra leniency special and differential
treatment. Among these are provisions that allow developed countries to treat
developing countries more favourably than other members.
2. The General Agreement on Tariffs and Trade (GATT, which deals with trade in
goods) has a special section on Trade and Development which includes
provisions on the concept of non-reciprocity in trade negotiations between
developed and developing countries when developed countries grant trade
concessions to developing countries they should not expect the developing
countries to make matching offers in return.
3. Both GATT and the General Agreement on Trade in Services (GATS) allow
developing countries some preferential treatment.
4. Other measures concerning developing countries in the FTA agreements
include: Extra time for developing countries to fulfil their commitments (in
many of the FTA agreements)
countries trading

provisions designed to increase developing

opportunities through

greater

market

access

(e.g.

in textiles, services, technical barriers to trade) provisions requiring EU

members to safeguard the interests of developing countries when adopting some
domestic or international measures (e.g. in anti-dumping, safeguards, technical
barriers to trade)
Provisions for various means of helping developing countries (e.g. to deal with
commitments on animal and plant health standards, technical standards, and in
strengthening their domestic telecommunications sectors

BIBLIOGRAPHY

The European Convention on Human Rights was previously only open to members of the
Council of Europe (Article 59.1 of the Convention), and even now only states may become
member of the Council of Europe
Article 39 (article 33) of the Treaty on the Functioning of the European Union, on eurlex.europa.eu

Council Directive 2000/43/EC of 29 June 2000 implementing the principle of equal

treatment between persons irrespective of racial or ethnic origin (OJ L 180, 19 July 2000,
p. 2226); Council Directive 2000/78/EC of 27 November 2000 establishing a general
framework for equal treatment in employment and occupation (OJ L 303, 2 December
2000, p. 1622).

REFERENCE

https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm#
TRS
http://europa.eu/about-eu/eu-history/index_en.htm
http://www.iimb.ernet.in/research/sites/default/files/WP%20No.
%20392_0.pdf
http://ec.europa.eu/trade/policy/countries-andregions/countries/india/
https://books.google.co.in/books?
id=HsNfnNwScAIC&pg=PA272&lpg=PA272&dq=india+european
+union+imports+and+export+trade&source=bl&ots=9uWBQzRcFq
&sig=o4SxN4twne1ftwsjgtmNIcMCbmQ&hl=en&sa=X&ved=0CE
UQ6AEwB2oVChMIpNSNn5KnyAIVg1KOCh3qsApg#v=onepage
&q=india%20european%20union%20imports%20and%20export
%20trade&f=false
http://www.kuna.net.kw/ArticleDetails.aspx?
id=2454637&language=en
https://aric.adb.org/fta/india-european-union-free-trade-agreement
http://www.thehindubusinessline.com/opinion/india-should-sealtrade-pact-with-eu/article6148512.ece
http://isq.sagepub.com/content/47/2-4/373.
http://eeas.europa.eu/delegations/india/eu_india/political_relations/i
ndex_en.htm
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2249788

http://commerce.nic.in/publications/anualreport_chapter8-200910.asp
http://igutek.scripts.mit.edu/terrascope/?page=Europeanunion
http://www.who.int/genomics/policy/eu/en/

European

Molecular

Genetics Quality Network. EMQN Newsletter. April 2003.

http://www.emqn.org/Assets/uploadpdfs/emqn_news_issue10.pdf
Accessed May 27th, 2004
http://ec.europa.eu/europeaid/documents/casestudies/india_economic-development_en.pdf