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Trade Impact Assessment of an EU-India Free Trade Agreement

Joseph Francois, Hanna Norberg () and Miriam Manchin ()
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Hanna Norberg: Lund (School of Economics and Business) and IIDE

No 20080601, IIDE Discussion Papers from Institue for International and Development Economics

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.

Keywords: CGE; EU-India Free Trade Area; GTAP (search for similar items in EconPapers)
JEL-codes: F13 F15 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2008-09
New Economics Papers: this item is included in nep-cmp, nep-cwa, nep-eec and nep-int
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