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The Proposed EU-India FTA: Implications for Textiles, Wearing Apparel and Leather Products

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  • Khorana, Sangeeta
  • Narayanan, Badri Gopalakrishnan

Abstract

This paper analyses the effects of a proposed free trade agreement (FTA) between the EU and India, for which negotiations are ongoing. The analysis employs GTAP 7, a global general equilibrium model with 2004 as its reference year. Two scenarios are simulated which include firstly, complete implementation of EU-India FTA such that all bilateral tariffs are completely and immediately eliminated; and, secondly, tariffs are eliminated on textiles, wearing apparel and leather products under the proposed FTA, which simulates the elimination of all export tax equivalents of Multi-Fiber Arrangement (MFA) quotas in the GTAP database. The macroeconomic effects of changes in trade policies are assessed by the welfare economic compensation measure. Results show India benefits under both liberalisation scenarios with gains concentrated in select products and in textiles, wearing apparel and leather products. The findings are broadly also suggestive of the change in the pattern of specialisation such that there is a shift to low value end production. An EU-India FTA delivers little scope for achieving efficiency gains via adjustments to the pattern of present specialisation.

Suggested Citation

  • Khorana, Sangeeta & Narayanan, Badri Gopalakrishnan, 2011. "The Proposed EU-India FTA: Implications for Textiles, Wearing Apparel and Leather Products," Conference papers 332132, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332132
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    References listed on IDEAS

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