Potential Benefits from a Deep EU–India Free Trade Agreement

Both parties to an eventual EU India FTA have agreed that it should not merely address tariff barriers but should also go further into what is known as deep integration, originally developed in the 1990s by R.Z. Lawrence. This relates to the removal of all obstacles to cross border business whether actual trade barriers or domestic regulations. We distinguish deep institutional integration from the deep integration of markets. We ask the question how one may support the other. There are potential market failures that can be addressed by trans-national rules on standards and technical regulations and services, but we conclude that the biggest impact of a deep RTA would be on the domestic economy of India if it provides an opportunity for reform. It should be noted that the paper draws on a study undertaken by the authors for DG Trade, but it represents only the views of the authors.