By EuAsiaNews,
Brussels : Will a free trade agreement (FTA) help India increase its exports to the 27-nation European Union (EU)? Both Mexico and South Africa have concluded FTAs with the EU.
There was a “healthy rise” in EU imports from these two countries between 2005 and 2006: imports from South Africa rose by 10 percent, and from Mexico by 15 percent.
However, over this same period the EU’s imports from India rose by 18 percent, according to the 27-page report which the EU’s executive arm, the European Commission, has just sent to the EU’s democratic institution, the European Parliament.
Unfortunately there is no information on how Mexico, South Africa and India fared in 2007 and 2008. This is because it takes time for the European Commission to collect the latest data from its 27 member states.
Even so, India did well in 2006 as compared to 2005. Take textiles. Asia’share of total EU imports over this period was 14.4 percent, that of ASEAN 7.5 percent. India’s share on the other hand was a hefty 26.7 percent.
The European Commission has painted its report with a broad brush. This is because the report’s aim is to demonstrate to EU Parliamentarians that the EU has “continued to use its trade policy to advance a pro-development agenda.”
The EU’s trade supremo, Trade Commissioner, Peter Mandelson, has stressed that his department’s report to Parliament shows the EU committed “to putting trade at the service of development, not only in theory but also in practice.”
Much of the information contained in the report focuses therefore on EU imports from the 50 Least Developed Countries and from the 70 or so African, Caribbean and Pacific countries with whom the EU has been busy negotiating Economic Partnership Agreements (EPAs).
EU imports from most Asian and Latin American countries are covered by the EU’s generalized system of preferences (GSP), of which India is a major beneficiary.
A key features of any GSP scheme are its rules of origin. Set the local content requirements very high and all except the most advanced developing countries will have difficulty meeting them.
.The EU Council of Ministers is expected to decide on the GSP regulations before the end of June. The draft rules of origin currently under discussion in the EU are based on an across-the-board Value Added rule.
The rule currently provides for a 30 percent local value addition. However, the threshold could rise between 50 percent and 60 percent, depending on the products concerned.
The report is interesting in the comparisons it makes, even though the data is only through 2006. Thus Asian and Mediterranean countries are of equal importance in terms of EU imports, which stood at some 100 billion euro* for each group in 2006.
* One euro equals Rs. 60 approx.