Public Meeting TSIA EU-India Phase 2 Report By: Paul Wijmenga & Koen Berden Brussels, 6 th of...
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Transcript of Public Meeting TSIA EU-India Phase 2 Report By: Paul Wijmenga & Koen Berden Brussels, 6 th of...
Public Meeting TSIA EU-IndiaPhase 2 Report
By: Paul Wijmenga & Koen Berden
Brussels, 6th of November 2008
Overview
1. Introduction
2. Selected sectors
3. Selected horizontal issues
4. FDI, gravity and NTB analysis
5. Consultations with Civil Society
6. Conclusions
7. Policy recommendations
PW
1. Introduction: 2nd Public Meeting
Goals of this meeting
1. Presentation of the second set of study results (Phase 2 – Interim Report);
2. Presentation of gravity estimation results on NTBs, FDI and investments;
3. Getting feedback, comments and suggestions for the study from civil society;
4. Initial discussion on policy recommendations and flanking measures
PW
1. Introduction: TSIA Methodology
• TSIA: look at economic, social and environmental sustainability impacts of trade measures negotiated within the EU-India FTA;
• TSIA quantitative and qualitative approach (CGE, Causal Chain Analysis and expert interviews);
• The TSIA is 50% modeling and analysis and 50% consultations: www.tsia.ecorys.com/india
• Phase 1: screening and scoping (GAR); Phase 2: in-depth studies of screened sectors/issues; Phase 3: policy recommendations and enhancement or mitigating measures
PW
Phase 2: In-depth studies into sectors and horizontal
issues1. Screening: Size as share of GDP, Expected Economic Impact,
Social/Environmental Impact, Civil Society
2. Sectors: Grains, Motor Vehicles & Automotives, Textiles & Clothing,
OBS, Financial & Banking services; Horizontal issues: Investment
Conditions, Technical regulations Industrial Products, SPS, Trade
Facilitation, IPR
3. Changes due to Civil Society comments: include IPR, make CGE
more dynamic, more clearly present assumptions and restrictions of
CGE, look at poverty aspects, ecological outcomes, horticulture is a
case study, CO2 analysis for both EU and India
1. Introduction: TSIA Methodology
PW
2. Selected sectors - Grains
- Overall positive impact economically, socially – small
effects – effect on poverty;
- CGE outcomes an upper limit (due to inefficiencies,
hidden unemployment);
- Remaining NTBs related to SPS issues – effect on
poverty;
- Expected growth in the Indian rice sector as a
consequence of liberalisation;
- Environmentally: eutrophication, chemicals, pesticides
and projected increase in GHG emissions.
KB
2. Selected sectors - Automotives
- Overall small mutually positive impact economically – larger if we
factor in FDI flows – larger impacts for India (31% tariff reduced);
- Expected reallocation of parts of the (labour-intensive) production
process from the EU to India;
- Combination of EU investments (including R&D) and Indian cheap
labour for (for example) assembly – strong combination;
- Issues related to technical regulations – NTBs – if addressed lead
to large two-way gains as costs of doing business/trade drop;
- Very small negative employment effects in India – efficiency – but:
excluding FDI factor;
- Environmentally: no significant projected primary impacts –
secondary: products produced are polluting.
KB
2. Selected sectors – Textiles & clothing
- Overall effects expected to be modest – regional effects may be more pronounced (lower output and employment in the EU);
- Investment flows EU to India expected to increase (for larger EU firms – not SMEs);
- Expected further specialisation of EU production into high-end and technical textiles;
- Strong positive economic effects in India: output, employment, real income growth;
- Positive effects in India for gender equality (female participation) and migrant workers;
- Small negative expected environmental impacts through bio-diversity, atmosphere, and water quality (industry) – most impact in apparel that is relatively least polluting
KB
2. Selected sectors – Finance & banking
- Note: with current financial crisis – interpret these
conclusions with caution – sector is very much in flux;
- Key aspect: to what extent does FTA increase FDI from
EU to India in financial & banking? If so, capital and small
employment gains (EU) and employment and technology
and cost gains (India);
- More competitive banking sector in India – lower costs of
transactions carry over to sectors in the economy;
- Important factor: how do – in parallel to FTA – Indian
banks connect to people (especially in rural areas)?
KB
2. Selected sectors - OBS
- Direct economic FTA effects for EU small – crucial is
how FDI flows increase because of more integration
and Indian openness on some OBS;
- Outsourcing and offshoring of EU OBS to India
expected to increase pace;
- Related to investment is mobility of experts and
contract workers with respect to OBS – there is a
potential economic impact based on UK example;
- Environmental effects expected to be negligible.
KB
3. Selected HIs: Investment conditions
KB
- Addressing investment conditions: NTBs (e.g. OBS)
- Increased investment flows into India – especially into
competitive sectors (e.g. Automotives, financial services,
chemicals, textiles) – for EU: firms more market access (not
only through trade – also investment);
- Positive social impacts – employment generation in sectors
(but efficiency vs. more jobs and agriculture not much effect
– some growth vs. mechanisation);
- Long run: positive R&D and technology effects;
- Overall environmental impact is negative: higher national
income more resource consumption
emissions/pollution.
3. Selected HIs: Technical regulations industrial products
KB
- Overall EU effects small – regional impacts to manufacturing industries (e.g.
Automotive, machinery);
- In India: lack of awareness of (EU) technical regulations – improve awareness
and understanding;
- TIDP – EU provides assistance to India to help upgrade TBT;
- Potential economic gains for Indian manufacturing (not so much agriculture) are
large – more trade with EU (market access);
- Social gains may follow economic gains: cleaner technologies, higher quality
products, cleaner production environment, etc.
- No direct environmental impacts, but indirectly – if TR cause growth in
manufacturing industries, negative impacts may follow (wastewater, air
pollution).
3. Selected HIs: SPS
KB
- Large divergence in SPS standards between the EU and India – large NTB in
agricultural sector;
- SPS harmonisation gains: EU: market access processed foods; India: market
access for raw agricultural materials and primary products;
- More beneficial effects for India than EU (based on trade flow analysis that
relates to SPS);
- Primary social impact small, but secondary effect substantial since it lowers
health risks (food safety higher, lower chance for diseases);
- Issue: base SPS standards on scientific evidence;
- FTA can make contribution to SME growth in agriculture (major achievement!)
if SPS harmonisation occurs and SMEs are allowed to benefit;
- Issue: implementation & enforcement
3. Selected HIs: Trade facilitation
KB
- EU advanced in aspects related to trade facilitation – if
addressed, Indian exports expected to benefit much more
than EU exports (in size) – EU: very small production effects
(in sectors where trade with India is relatively larger);
- The more ambitious the FTA, the more positive the
economic potential effects are (both EU/India);
- In India some social impacts (employment) in sectors that
benefit from lower transport costs and shorter waiting lines
(e.g. fresh fruits, fisheries);
- Environmental impacts are considered negligible;
3. Selected HIs: IPR
KB
- Issue: regulation, but also implementation and enforcement;
- Direct economic impact for EU very small;
- In longer run: dynamic effects through higher incentive to
invest in R&D – positive;
- For EU services and industry: more ‘fair’ level playing field
internationally (against counterfeiting);
- For India IPR enforcement among Indian firms can lead
(LR) to higher TFP growth through enhanced innovation
and R&D;
4. FDI, investment and NTB analysis (1)
KB
- Strongly increasing FDI into India (e.g. €13.6 bn – 2005 –
lower estimate) and much lower back (€200mln average);
Rank Sector Share of total FDI inflow (%)
1 Services sector (financial and non financial; other than computer services, construction and telecomm.)
20
2 Computer software and hardware 16
3 Telecommunications 8
4 Construction activities 5
4. FDI, investment and NTB analysis (2)
KB
4. FDI, investment and NTB analysis (3)
KB
5. Consultations with civil society (1)
1. Formal parts from ToR of the TSIA EU India: Public
Meeting 1 (GAR), Workshop Delhi, Public Meeting 2 (Phase 2)
2. To come: Public Meeting 3 (Phase 3)
3. Website consultations – feedback, online visits,
consultation round (6th – 27th November 2008)
4. Report and survey designed – will be sent out for
comments (in EU & India) – to European Services Forum,
Business Europe, Bureau Europeen des Unions des
Consommateurs, etc. etc. + to those who ask for it via Public
Meeting or website (list going around to sign up)
PW
5. Consultations with civil society (2)
5. Face-to-face meetings (upcoming based on Phase 2 report):a. In India with: UNDP, Center Int Trade - Agri, Federation of Trade
Unions, Federation Indian SMEs, NASSCOM, Energy &
resources Institute, etc.
b. In the EU with: Business Europe, Foreign Trade Association, EU
business & industry associations, Various DG experts
Comments deadline Phase 2: 13th of November – through
www.tsia.ecorys.com/india;
Comments deadline Phase 3: 27th of November – through
www.tsia.ecorys.com/india
PW
6. Contact
For more information or giving feedback, contact us:
Website: www.tsia.ecorys.com/india
Email address: [email protected]
THANKS FOR YOUR ATTENTION
PW
QUESTIONS?
PW
7. Policy recommendations
For Phase 3: policy recommendations and flanking measures (enhancing mitigating).
We launch an official consultation round for comments on policy recommendations from 6th November – 27th November 2008
To address the following questions:1. How can the strengths of the FTA (see Phase 2 report) be enhanced
by further policy action?2. How can the negative impacts of the FTA (see Phase 2 report) be
mitigated by additional policy action?3. What other policy recommendations do you have (at sector level!) to
maximise the potential gains from the EU-India FTA?
Go to: www.tsia.ecorys.com/india - to give your replies.We send you the final TSIA EU-India report in response to your
comments.
PW