Bilateral Trade Agreements in the Era of Globalization

Bilateral Trade Agreements in the Era of Globalization

The EU and India in Search of a Partnership

Sangeeta Khorana, Nicholas Perdikis, May T. Yeung and William A. Kerr

This unique book provides an assessment of an Indian–EU agreement, drawing on the theory of preferential agreements, the history of India–European relations and the recent refocusing of the Indian economy. The authors explore both a broad overview of the agreement as well as a detailed examination of sensitive sectors.

Chapter 1: Imagine

Sangeeta Khorana, Nicholas Perdikis, May T. Yeung and William A. Kerr

Subjects: economics and finance, international economics


1.1 INTRODUCTION An agreement to merge a market of 500 million Europeans with a market of just over a billion Indians is something that fires imaginations. The combined market represents approximately one-fifth of humanity and would be the largest free trade area ever attempted. The diversity of both India - from the tea plantations of Darjeeling to the computer software firms of Bangalore - and the European Union - from the cork groves of central Portugal to Airbus assembly plants in Toulouse, France - provides a range of resources, skills and entrepreneurial flair that is a microcosm of the global marketplace. Much of the benefit of globalization is expected to arise from the specialization stemming from economies of scale (Greenspan, 2007). The possibility of integrating the Indian and European Union (EU) markets, however, raises the question as to whether their joint market is sufficiently large to reap almost all of the potential benefits available from globalization. Would there be any additional benefits from extending the India-EU market to encompass the rest of the world? This is an important question because, while the European Union is still a collection of individual nation states with a relatively weak collective governance structure and India is a federation where sub-national governments have considerable constitutionally granted authority, both function as relatively unified economic markets. The EU Commission is responsible for developing a common trade policy for the entire European Union. The Government of India also has sole responsibility for trade policy. Thus, trade negotiations pertaining...

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