Presentation on theme: "Public Meeting TSIA EU-India Phase 2 Report By: Paul Wijmenga & Koen Berden Brussels, 6 th of November 2008."— Presentation transcript:
Public Meeting TSIA EU-India Phase 2 Report By: Paul Wijmenga & Koen Berden Brussels, 6 th 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 issues 1.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); RankSectorShare of total FDI inflow (%) 1Services sector (financial and non financial; other than computer services, construction and telecomm.) 20 2Computer software and hardware16 3Telecommunications8 4Construction activities5
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: firstname.lastname@example.org THANKS FOR YOUR ATTENTION 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 6 th November – 27 th 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
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