European UnionEuropean Union

Introduction of European unionIntroduction of European union

• The European Union (EU) is an intergovernmental and supranational union of 27 democratic member states

• The European Union was established under that name in 1992 by the Treaty on European Union (the Maastricht Treaty)

• The Union currently has a common single market consisting of a customs union

• A single currency managed by the European Central Bank (so far adopted by 12 of the 25 member states),

• A Common Agricultural Policy, a common trade policy, and a Common Fisheries Policy. A Common Foreign and Security Policy

EUROPEAN UNION EUROPEAN UNION

History of the EUHistory of the EUDate History of Country's Membership

25 March 1957

Belgium, France, West Germany, Italy, Luxembourg, Netherlands, founding members

1 January 1973

Denmark, Ireland, United Kingdom

1 January 1981

Greece

1 January 1986

Portugal, Spain

3 October 1990

(The territory of the former German Democratic Republic as part of unified Germany also becomes part of the European Community)

1 January 1995

Austria, Finland, Sweden

1 May 2004

Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia

1 January2007

Bulgaria and Romania

Stages towards European Union Stages towards European Union European UnionEuropean Union

 

First Stage

 

Second Stage

 

Third Stage

 

European Communities (EC) Common Foreign and Security Policy (CFSP)

Police and Judicial Co-operation in Criminal Matters (PJCC)

Customs Union and Single market

Common Agricultural Policy Common Fisheries Policy EU competition law Economic and monetary union EU-Citizenship Education and Culture Trans-European Networks Consumer protection Healthcare Research (e.g. Sixth

Framework Programme) Environmental law Social policy Asylum policy Schengen treaty Immigration policy

Foreign policy: Human rights Democracy Foreign aid Security policy: European Security and

Defense Policy EU battle groups European Rapid Reaction

Force Peacekeeping

Drug trafficking and weapons smuggling

Terrorism Trafficking in human beings Organized crime Bribery and fraud

 

OBJECTIVES OF EU OBJECTIVES OF EU

To promote social and economic progress

To establish an area of freedom, security

and justice

To enhance the environment of Europe and

the world

To secure and defend the Union

Commercial policyCommercial policy

• Competition Policy

• Free movement of the goods

• Free movement of the persons

• Services

• Capital

• Taxation

• Once goods have been admitted into the market they can not be subjected to customs duties

• Free Movement of Capital

• Free Movement of People

• Free Movement of Services

The currency- euroThe currency- euro

The currency- euroThe currency- euroThe European Central Bank governs the Euro zone monetary policy

1 January 1999 on this date the euro was duly launched by member states of EU

Agriculture:• The Common Agricultural Policy (CAP)

• Agriculture accounts for over 35% of the European Community's annual budget

Energy:• Many EU members import oil and gas from Russia • World’s leading importer of these fuels

Development trust areas:Development trust areas:

Infrastructure:• The EU is working to improve cross-border infrastructure within the EU, for example through the Trans-European Networks (TEN)

• Projects under TEN include the Channel Tunnel, LGV Est, the Fréjus Rail Tunnel, the Oresund Bridge and the Brenner Base Tunnel

Risk involved in doing business Risk involved in doing business with E Uwith E U

• Foreign exchange risk

• Cross country risk

• Transactional risk

• Socio-cultural risk

External trade: European unionExternal trade: European union

• The European Union is the world’s biggest trader, accounting for 20% of global imports and exports

• EU’s major trading partners among the developed countries like united states and Japan

• The trade is handled through the WTO mechanisms

Trade and development of Trade and development of European union European union

• The Union has granted duty-free or cut-rate access to its market for imports from developing countries under its generalized system of preferences(GSP)

• New trade and development strategy with it’s 78 partners in the Africa-Pacific-Caribbean(ACP)

• Trade agreement with South Africa

• Free trade deal with 6 members of Gulf Corporation Council(GCC)

EU & INDIAEU & INDIA

• The EU is India's largest trading partner accounting for a fifth of India’s trade

• EU imports from India came to US $ 22,945 million covering mainly textiles and clothing,

agricultural products and chemicals• EU exports to India amounted to US $ 22,838

million , of which the majority was machinery, chemical products and gems and jewellery

• Since 2001, bilateral trade between the two has grown by 11 % on average

EU’s Export & ImportEU’s Export & ImportYears 2001-02 2002-03 2003-04 2004-05 2005-06

Export 10615.82 12805.64 15002.02 19107.81 22838.09

Import 10166.56 11871.24 14453.43 18110.84 22945.02US $ Million

0

5000

10000

15000

20000

25000

2001-02 2002-03 2003-04 2004-05 2005-06

EU's Export & Import with India

Export Import

Source:- CMIE

EU’S EXPORTEU’S EXPORT

SECTORSTotal from April to June 2006 (in Euro)

Percentage increase over last yr in the

same period

Agro & Food 4,12,24,940 21%

Chemicals/ Pharma /Plastic 73,13,75,097 24%

Leather / Wood & Paper 18,46,44,796 5%

Textiles/ Garments etc 7,85,64,577 -3%

Stones/ Ceramics / Glass 3,28,29,48,269 4%

Automotive 1,05,88,63,514 20%

Optical/photograph/ Musical /Ammunition 26,83,98,723 33%

Other Products 3,98,57,955 20%

Total 5,76,89,41,543 11%

EU’S IMPORTEU’S IMPORT

• The total imports from India in the 2007 between April to June 2007 have increased to 9% over the last year in the same period

• EU’s major items of imports from India consisted of optical, photograph, musical instruments, ammunition (19%), automotive (10%), and stones, ceramics & glass (13%)

SECTORSTotal from April

to June 2007 (in Euro)

Percentage increase over last yr in the

same period

     

Agro & Food 45,49,92,823 7

Chemicals/ Pharma /Plastic 93,08,97,208 5

Leather / Wood & Paper 23,66,52,057 6

Textiles/ Garments etc 1,67,57,98,382 7

Stones/ Ceramics / Glass 1,24,74,83,691 13

Automotive 47,14,47,494 10

Optical/photograph/ Musical /Ammunition 4,85,79,119 19

Other Products 14,30,64,707 8

Total 5,20,89,15,481 9

EU’S IMPORTEU’S IMPORT

Trade relation with IndiaTrade relation with India

• India is an important trade partner for EU and a growing global economic power

• Sizable and growing market of more than 1 billion people with a growth rate of between 8 and 10%.

• Free Trade Agreement negotiations, launched by India and EU in 2007.

Why EU interested in IndiaWhy EU interested in India

• Liberalization and modernization of Economy since 90 and dynamic performance in various sectors• Enhanced world trade and investment flows meeting the demands of WTO• Low labour cost, English speaking proficiencies, solid educational system• Top IT sector with qualified professionals• Huge potential of food processing sector• Engineering with low production cost• High growth rate of telecom sector• Simplified licensing to encourage FDI

Trade relation with IndiaTrade relation with India

Trade in goods • EU goods exports to India 2007 : €26.2 billion• EU goods imports from India 2007 : €29.4 billion

Trade in services• EU services exports to India 2007 : €6.7 billion• EU services imports from India 2007 : €5.5 billion

Foreign Direct Investment• EU outward investment to India 2007 : €2.5 billion• Indian inward investment to EU : €0.5billion

The E U India FTA The E U India FTA

EU FTAs launched as part of the Global Europe Strategy in 2006

Negotiations for such FTA were launched in June 2007

Aim is to increase market access for goods, services and investment by tackling not only tariff barriers to trade but also non-tariff barriers

PRODUCTS THAT CAN BE EXPORTED PRODUCTS THAT CAN BE EXPORTED TO EUTO EU

• Automobiles (light commercial vehicles), auto engines and components

• Metals and metal based products• Leather products• Chemicals and pharmaceuticals• Handicrafts• Engineering goods like diesel engines• Textile yarns, Woolen and cotton fabrics• Agricultural products• IT products and services• Consumer durables• Biotech products

STRATEGIES TO ENTER INTO THE EU STRATEGIES TO ENTER INTO THE EU

• Setting up / establishing offices in these countries• Joining hands with Joint Venture partners for production

and/or marketing• Appointing agents for introducing and familiarizing Indian

products in these markets• Developing regular contacts through participation in

buyer seller meets• Enlisting in the local trade directories and advertising in

the local trade journals and media• Creating greater awareness about Indian products by

participating in all their trade fairs.

FOCUS AREAFOCUS AREA

• Quality Certification (QC)

• Service reliability (SR)

• Competitive Pricing (CP)

• Strategic alliances with local companies, collaborations/partnerships (SA)

• Knowledge of local languages (LL)

STEPS NEEDED FOR INCREASING STEPS NEEDED FOR INCREASING EXPORTS TO EUEXPORTS TO EU

• Organize buyer-seller meet• Participate in overseas trade fairs• Open local offices• Make an effort to identify reliable local partners• Must take initiatives to start dialogues with like minded

Joint Venture partners on the other side to look at possibilities of business

• Must develop a compendium of information relating to Indian industry’s capabilities and export potential and circulate the same amongst businessmen in the EU countries to establish and further business connectivity

• Create INDIA TRADE CENTRES in the EU countries on a self-supporting and cooperative basis.

SECTORS WHERE TECHNICAL / FINANCIAL SECTORS WHERE TECHNICAL / FINANCIAL COLLABORATION IS POSSIBLECOLLABORATION IS POSSIBLE

• Automobile sector• Steel• Information Technology• Food Processing• Banking• Heavy equipment and machinery• Defense Equipments• Metallurgy & Exploration activities in Hydrocarbon, Gas, Oil• Aviation sector• Power projects• Architectural & Engineering Services and Construction