EU-India free trade agreement : a quantitative assessment

This report analyses the effects of a regional trade agreement (FTA) between the EU and India, for which negotiations are underway. The study starts with abrief overview of the key insights from the existing literature on FTAs and their relationship with multilateral negotiations. The remainder of the study is devoted to analysing the impact of tariff slashes under an FTA on merchandise trade between the EU and India. Of particular interest are the implications for agricultural markets, given the tension between agricultural liberalisation and India's policy goals relating to self-sufficiency in food grains and poverty reduction. The analysis employs GTAP, a global general equilibrium model using a recent database which has 2004 as its reference year. The results suggest that India's interests in a regional trade agreement with the EU are downplayed by the fact that India's economy is not well integrated in global markets. Impacts on the EU are minor and further reduced if a Doha agreement is in place when the FTA is implemented. Results indicate the rationale for a strongly asymmetric arrangement: it would be in the interest of both partners if the EU provides large concessions to India for market access, while India maintains the bulk of current border protection. An EU - India FTA delivers little scope for achieving efficiency gains via adjustments to the pattern of international specialisation. An EU - India agreement on merchandise trade is unlikely to embody substantial preferential treatment with regard to market access. Probably, India can find more suitable FTA partners. Agriculture is a key sector for India in the consideration of equity and growth purposes of a FTA with EU

Changing diets in a changing world: assessing the impact of urbanisation on agriculture

Two thirds of the world’s population is projected to live in urban areas by 2050; rising from 54% in 2014 (United Nations,2014). Coupled with economic growth, the trend for increasingly wealthy urban consumers is expected to have important implications for the pattern of food demand and consequently, agricultural production. Key differences in the diets of urban consumers relative to rural consumers imply that large-scale urbanisation will have significant impacts on the agricultural sector; through lower expenditures on staple goods and higher consumption of high value products. These consumption-side effects are coupled with production-side effects as people move from rural to urban areas impacting agricultural labour markets. We analyse the impact of projected trends in urbanisation on agriculture in China, India and Ghana for the period 2010-2030 using the MAGNET model which includes a household module based on the MyGTAP model and a nutrition module that reports the macronutrients associated with consumption. We examine the impact of urbanisation on agriculture by comparing a baseline scenario and a high urbanisation scenario. The baseline scenario follows SSP2 (“Middle of the Road”) in which urbanisation follows current trends and developing countries follow the experiences of more developed countries. The high urbanisation scenario follows higher rates of urbanisation taken from SSP 1. The preliminary results indicate that higher incomes in urban areas boost demand for food in all categories, with the largest increases seen in the higher value products. The decline in incomes in the rural area lead to a reduction in consumption across all food products with the largest reduction in staples and fruit, vegetables and other crops. The shifts in consumption and changes in the supply of labour arising from urbanisation lead to a contraction in the agricultural sector