The Proposed India-EU Trade Agreement and UNECE 1958 Provisions: Empirical Results for Indian Automobile Sector

Debashis Chakraborty (), Biswajit Nag () and Ripudaman Bhardwaj ()
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Biswajit Nag: Indian Institute of Foreign Trade,New Delhi,India
Ripudaman Bhardwaj: Student, Indian Institute of Foreign Trade, Kolkata, India

No 2151, Working Papers from Indian Institute of Foreign Trade

Abstract: In 2014, India adopted the ‘Act East’ Policy to enhance trade flows with the East and Southeast Asian partners. A degree of caution in the outlook has however been noticed with the pull-out from the Regional Comprehensive Economic Partnership (RCEP) negotiations in November 2019, on the ground of domestic economic considerations. In the subsequent period, India has expressed willingness to enter with trade agreements with the ‘West’, namely, the European Union (EU) and the United States of America (USA). However, these trade partnerships may not be effective in enhancing Indian exports only through tariff reforms, and the role of quality harmonization needs to be acknowledged in this context. The automobile sector is an important case in point. The United Nations Economic Commission for Europe (UNECE) World Forum for Harmonization of Vehicle Regulations Working Party 29 (WP.29) has three agreements for harmonizing technical regulations on vehicles and auto-components to facilitate road safety, namely: UNECE 1958, 1997 and 1998. India joined the UNECE 1998 agreement in April 2006. It deserves mention that EU members are party to UNECE 1958 and have requested India at times to consider joining the 1958 Agreement. India has so far refrained from joining the UNECE 1958 standard, given the reservations against certain provisions of the same. The current paper intends to analyse the potential impact of the tariff reforms on the India-EU bilateral trade flows using the WITS-SMART analytical framework. The simulation results indicate that India’s export benefits would be limited vis-à-vis the EU, arguably owing to competition from countries already conforming to the UNECE 1958 standards. The analysis concludes that India needs to closely evaluate its options, keeping in mind the growing inclination towards UNECE 1958 even among some of the existing RTA partner countries (e.g., ASEAN). Thus, the Indian policymakers need to assess all these potential challenges before coming to a decision on the practicality of joining UNECE 1958 forum.

Keywords: Automobile safety standards; UNECE; WP29; Indian automotive sector trade; Intra-Industry Trade; EU-India FTA; WITS-SMART Simulation (search for similar items in EconPapers)
JEL-codes: F13 F15 F17 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2021
New Economics Papers: this item is included in nep-int and nep-sea
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