India is rapidly taking stronger positions in the global political arena and the world economy. For the EU this has led to start negotiations on a free trade agreement, aimed at a mutual opening up of markets for industrial and agricultural goods. A model-based assessment indicates that it would be in the interest of both partners if the EU provides large concessions to India for access to its markets, while India keeps the bulk of current border protection intact. This finding contrasts with the current trade policy of the EU which focuses on reciprocal trade agreements. Also, it is conflicting with WTO rules that require a free trade arrangement to cover 'substantially all the trade' between the constituent members.
A stronger economic rationale for India to engage in a free trade agreement with the EU is possibly found in the benign effects of 'deep' economic integration. That would mean creating an economic space where goods and capital move without barriers under jointly shared rules regarding competition and investment policy, sanitary measures, intellectual property rights and so on. For example, the agricultural sector in India is likely to benefit strongly from an exchange of technology and skills with EU partners.
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