Indo-EU Agricultural Trade: Trade Restrictions and SPS Measures

Abstract

Agricultural trade is becoming more important today due to its multi-dimensional importance. Technical standards such as sanitary and phyto-sanitary (SPS) measures impose barriers to agricultural-trade. In some cases SPS measures are also advantageous for countries from the point of protection of plant, animal and human health. Against this backdrop, this paper attempts to examine issues and trends related to trade restrictions and SPS measures with special reference to Indo-European Union (EU) agricultural trade. Results from various indices such as Trade Intensity Index: Tij = (xij / Xit) / (xwj / Xwt), Revealed Comparative Advantage Index: RCAij = (xij / Xi) / (xwj / Xw) and Export Specialization Index: ES = (xij / Xit) / (mkj / Mkt) shows the growing trade potential between India and EU. India is in a more vulnerable position in agro-trade than EU due to the SPS measures adopted by the EU. Indian products such as rice, cotton, fruits and vegetables are mostly affected by the EU's SPS measures whereas from the EU side wines and spirits, raw hides and skins and other agro-products are more prone to SPS challenges. This paper also highlights the recent unilateral action of the EU Commission over ban on some agro-products of India which raised much apprehension and repercussions from both the trade partners. Results confirm that authorities from both the sides have adopted reciprocal and restrictive attitude towards trade through various non-tariff measures (NTMs). Proactive steps in trade may tap the Indo-EU agricultural-trade potential.

Full text

Óbuda University e-Bulletin Vol. 8, No. 1, 2018
– 13 –
Indo- EU Agricultural Trade: Trade Restrictions
and SPS Measures
Kumar Chandan, Bharti Nalin
Department of Humanities & Social Sciences, Indian Institute of Technology Patna, India
ck9973715@gmail.com; nalinbharti@gmail.com
Abstract- Agricultural trade is becoming more important
today due to its multi-dimensional importance. Technical
standards such as sanitary and phyto- sanitary (SPS)
measures impose barriers to agricultural- trade. In some
cases SPS measures are also advantageous for countries from
the point of protection of plant, animal and human health.
Against this backdrop, this paper attempts to examine issues
and trends related to trade restrictions and SPS measures
with special reference to Indo- European Union (EU)
agricultural trade. Results from various indices such as
Trade Intensity Index: Tij = (xij / Xit) / (xwj / Xwt), Revealed
Comparative Advantage Index: RCAij = (xij / Xi) / (xwj / Xw)
and Export Specialization Index: ES = (xij / Xit) / (mkj / Mkt)
shows the growing trade potential between India and EU.
India is in a more vulnerable position in agro- trade than EU
due to the SPS measures adopted by the EU. Indian products
such as rice, cotton, fruits and vegetables are mostly affected
by the EU’s SPS measures whereas from the EU side wines
and spirits, raw hides and skins and other agro- products are
more prone to SPS challenges. This paper also highlights the
recent unilateral action of the EU Commission over ban on
some agro- products of India which raised much
apprehension and repercussions from both the trade
partners. Results confirm that authorities from both the sides
have adopted reciprocal and restrictive attitude towards
trade through various non-tariff measures (NTMs).
Proactive steps in trade may tap the Indo- EU agricultural-
trade potential.
Keywords: agro- products, non- tariff measures, trade potential,
RCA index, export specialization index.
I. INTRODUCTION
The purpose of this paper is to explore empirically
India- European Union (EU) trade with focus on
agricultural trade. This study discusses performance of the
agriculture sector and the sanitary and phytosanitary (SPS)
measures in detail of both the trading partners, and also
validates this with the recently emerged agricultural trade
restrictions. The paper tries to test three hypotheses.
Hypothesis 1: India- EU agro trade is untapped.
Hypothesis 2: India’s SPS measures are restricting the
EU’s agricultural trade. Hypothesis 3: India and the EU
both can grow through increasing trade.
Agriculture has today transformed into a strategic
sector, which is comprised of many policy orientations and
agreements. Countries rely heavily on agricultural exports
for faster growth, wider markets, higher foreign
exchanges, greater economies of scale and reduction in
poverty. Ever since the Uruguay Round (1994) brought
Agreement on Agriculture (AoA) and reformed
agricultural trade with new rules and commitments for
market policies, trade distortions started taking place in the
form of protectionist policies by non- tariff measures
(NTMs) like import quotas, export subsidies and SPS
measures, etc. The Agreement on SPS measure was started
in January 1995 giving nations a right to protect animal,
plant and human health. When an agricultural- product is
imported into a country, it is ensured that it meets all legal
requirements of that importing country for the easier entry.
Some of the laws which are taken into considerations are
labeling, chemical residue tolerances, food safety laws,
quotas and tariffs. World Trade Organization (WTO)
member countries make domestic laws in such a manner,
so that it meets all the obligations of SPS measures.
Although member countries maintain SPS measures
according to WTO norms, trade distortions still prevail.
Thus, member countries try to maintain international high
standards in food trade based on the scientific
justifications outlined within the SPS measures.
The European Union follows a ‘rule of law,’
which says that every action taken by the EU is based on
treaties (legislations), which are approved by all the EU
members voluntarily and democratically. An EU law has
equal rights and obligations to the authorities of every
member EU country. Most recent European trade policy,
i.e. ‘Europe 2020 strategy’ aims to strengthen trade
relations of the EU with its strategic partners. It also looks
into creating market access in agriculture, compliance with
international standards, protection of the environment and
strengthening its dispute settlement system. ‘- In the EU,
agriculture has remained as a bulk activity and important
domain for the past 30 years and subject to the mutual
recognition principle in the EU’s legislation policy [1].
But, at the same time, agriculture in the EU has been
subject to different challenges due to emerging

K. Chandan et al. Indo- EU Agricultural Trade: Trade Restrictions and SPS Measures
– 14 –
globalisation in trade and issues of increasing
competitiveness. The EU followed interventionism in
agriculture early on. The ‘European Model of Agriculture’
started with the creation of ‘EU Common Agricultural
Policy’ (CAP) in 1960 to meet self- sufficiency. This
policy was also regarded as a multinational integration
process. The CAP was further extended as ‘Agenda 2000’
which included more market orientation and issues such as
food safety and quality and environmental concerns of
agricultural policy, etc. [2]. The high protection of
agriculture in the EU and the defensive steps of India
towards agricultural trade has become an important area of
concern. This has been exaggerated by the risks of SPS
and technical barriers to trade (TBT) measures, which are
established by both countries’ legislation, which affects
each other’s macro environment [3]. According to an
annual report of the Government of India, India’s trade is
hampered by SPS measures, technical barriers, a complex
system of quota/tariff, and anti-dumping measures, etc.
The EU’s agro- product market has stringent quality norms
and standards compared to India’s market [4].
Some previous literature discusses the India- EU trade
pattern, which Nataraj’s investigation of India- EU trade
relations over the period 2011-13 stated that trade and
investment between these two trading partners has been
hampered by different issues such as SPS, Technical
Barriers to Trade (TBT) and other non- tariff measures [5].
Bhattacharya analysed India- EU trade over the period
1990-2000 and found that the EU frequently used severe
SPS standards on its imports from the basket of Indian
agricultural- products [6]. Bhattacharya analysed using a
revealed comparative advantage index and a comparative
export performance and argued that India had a
comparative advantage over its main rivals in the EU
market in the vegetables and fruit sectors but not in the
flower sector [7]. Golder studied India- EU trade over the
period 2009-13 and supported strengthening relations for
more market access [8]. Sawhney argued that India
suffered from institutional gaps in food safety regulation,
testing and certification facilities, which created problems
for a better market access in developed countries like the
European Union and the United States which have stricter
standards in safety and quality of food exports [9]. In an
interesting empirical study Sinha, Bharti, Takács, and
Takàcsné- György critically analysed Indo- Hungary
agricultural trade and pointed out to strengthen India- EU
trade relations [10]. Bhutani, expressed that the EU was
keen to include provisions on SPS and TBT in the India-
EU free trade agreement (FTA). This may limit the power
of local communities and national governments to set their
own standards in relation to bio safety, food safety and
other health concerns [11]. Sinha also quoted that one of
the major challenges emerging before ‘New India’ i.e. for
India after economic reforms, was the judicious use of
non- tariff measures in which SPS measure had become- a
major area of concern for the exporters [12]. Gasiorek et
al. provides a revealing insight that with increased demand
for high- value food products, India could profit by
viewing higher standards (SPS measures) as stimulus for
investments in supply – chain modernisation and for a
more long term- sustainable and profitable trade. It was
also suggested that India and the EU countries, should
adopt compliance with SPS and TBT measures,
appropriate standards, regulations, testing and certification
procedures which did not create unnecessary obstacles in
trade between these two countries [13].
The paper is structured as follows. Section I - deals
with introduction, problem and related literature. Section
II - provides the data and methodological parts. Section III
- presents the results and findings which includes current
situation of India- EU agro- trade, trade restrictions and
empirical data analysis. Section IV - throws light on
implications and Section V- summarizes the conclusion of
the paper.
II.MATERIALS AND METHOD
The paper is based on an analytical framework, in which,
for a qualitative study, agricultural trade disputes of both
the trading partners was assessed. The study uses different
indices like trade intensity index, revealed comparative
advantage index and export specialization index to analyse
the pattern of recent trends between both the trading
partners. For this, the selected agricultural food products
of- HS6 classification by UN Comtrade was computed for
the period of 2011-2014. Data were collected from the
different government sources like ITC, WTO, and
Department of Commerce Govt. of India, etc. Document
analysis of the agricultural trade dispute cases available at
the Dispute Settlement Body (DSB) of WTO was
completed to get a clear picture.
Trade intensity index was used to determine whether the
value of trade between these two countries was greater or
smaller, than would be expected, on the basis of their
importance to world trade. It is calculated as,
Tij = (xij / Xit) / (xwj / Xwt)
where
xij and xwj are values of country i’s exports to country j and
world exports to country j
Xit and Xwt are country i’s total exports and total world
exports respectively.
The value of more than 1 indicates that trade flow is larger
than expected, given the partner country’s importance in
world trade and vice versa.

Óbuda University e-Bulletin Vol. 8, No. 1, 2018
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Revealed Comparative Advantage (RCA) index proposed
by Balassa (1965) has been used to analyse product wise
export potential and competitiveness. It is measured as the
product’s share in a country to its share in the world trade.
RCA value of less than 1 indicates that the country does
not have revealed comparative advantage in the
production of commodity j and a value of more than 1
show the comparative advantage in trade of commodity j.
The value equal to 1 shows a similar level of specialization
with the world’s specialisation. RCA index has been used
to study the specialization pattern of agricultural export
sectors of India and the European Union. RCA index has
been calculated for both the trading partners individually
for the period of 2011 to 2014, of different agro- products.
The advantage of the RCA index is that it shows the degree
of comparative advantages of a product compared to other
products. But, its limitation is that it omits imports in the
estimation, which further creates biasness.
It is calculated as:
RCAij = (xij / Xi) / (xwj / Xw)
where
xij is ith country export of commodity j to world
Xi is ith country total exports to world
xwj is world exports of commodity j and
Xw is total world exports.
Export Specialization Index provides product information
on revealed specialization in the export sector of a country.
It is the ratio of share of a product in country’s total exports
to share of the same product in imports to a specific
country. The value less than 1 shows the comparative
disadvantage and value above 1 shows specialization in
the market. The Export Specialization index has been
calculated between both the trading partners over the
period of 2011 to 2014 for different agro- products.
Its formula stands as:
ES = (xij / Xit) / (mkj / Mkt)
where
xij and Xit are export values of country i in product j and
total exports of country i respectively
mkj and Mkt are import values of product j in market k and
total imports in market k respectively.
III.RESULTS AND DISCUSSIONS
A. India- European Union Trade
The European Union 28 is the world’s largest multi- nation
trading bloc with 28 nations as of July 1, 2013 and is the
biggest importer and exporter of merchandise goods in the
world. Its trade with rest of the world accounts for 20
percent of the global exports and imports excluding intra-
EU trade. India was the EU’s ninth largest trading partner
in imports and has a 2.1 % share in the EU’s trade in 2014.
The EU was the second largest trading partner for India in
2013 [14]. The EU recognizes India as an emerging global
player and important regional power in Asia which can
help the EU improve its economic profile in Asia through
‘New Asia Strategy’. The EU also regards India as one of
the world’s largest emerging economies where immense
opportunity is present through an availability of a larger
market [15]. The EU imports from India increased to €39.9
million in 2011 from €16.4 million in 2004 but decreased
to €37.0 million in 2014. The EU exports to India shows
the fluctuating trend as it was €17.1 million in 2004, which
increased to €40.5 million in 2011, but came down to
€35.4 million in 2014.
Table I shows that India’s trade intensity index (TII) with
the EU increased, but EU’s TII with India has decreased
during 2011-2014. This shows that trade from India with
EU has increased consistently, but trade from EU with
India has a slight declining trend during the given period
[16].
TABLE I. TRADE INTENSITY INDEX OF INDIA AND
EUROPEAN UNION
Year
India’s TII with
EU
EU’s TII with India
2011
0.0092
0.5659
2012
0.5342
0.5429
2013
0.5170
0.4477
2014
0.5022
0.0456
Source: Author’s computations based on data available from ITC UN
Comtrade (2015).
B. India- European Union Agricultural Trade
Agriculture in the EU is given special treatment to
maintain the balance between agricultural output and
foodstuffs demand. It is the principal source of income for
20 percent of the EU’s population and 3 percent share in
the GDP of the country and 8.3 percent in the employment.
In case of India, agriculture is regarded as the backbone of
the economy. As per the 2011- census of Govt. of India,
the share of agriculture and allied sector in India’s GDP
was 13.9 percent and in employment it was 54.6 percent in
2013-14.
Table II -shows that India’s agricultural exports to the EU
experienced an increasing trend over the period of 2009 to
2013. It increased from USD 2186 million in 2009-10 to
USD 3895 million in 2011-12 and USD 4197 million in
2013-14. Indian agricultural imports from the EU
countries were USD 294 million in 2009-10, which

K. Chandan et al. Indo- EU Agricultural Trade: Trade Restrictions and SPS Measures
– 16 –
reached to USD 632 million in 2011-12, but in 2013-14 it
decreased to USD 609 million [17].
TABLE II. INDIA- EUROPEAN UNION AGRICULTURAL TRADE
Year
Export (USD
million)
Import (USD million)
2009-10
2186
294
2010-11
2925
406
2011-12
3895
632
2012-13
3875
626
2013-14
4197
609
Source: Department of Commerce, Govt. of India (2015)
Table III shows the account of all major products exported
to the EU -from India during 2013-14. Shrimps and
prawns were major items of exports to the EU followed by
cuttle fish, coffee and rice etc. In aggregate, the Indian
agricultural exports to the EU countries increased from
USD 3875 million in 2012-13 to USD 4197 million in
2013-14 [17].
TABLE III. INDIA’S TOP AGRI EXPORTS TO EUROPEAN UNION
(value in USD million)
Product
HS Code
Commodity
2012-13
2013-14
30617
Other Shrimps and
prawns: frozen
-
559.39
30749
Cuttle fish and squids
exclusive live fresh/chld
181.93
-
90111
Coffee neither roasted nor
decaffeinated
431.2
389.83
100630
Semi/ wholly milled rice
w/n polished/ glazed
385.77
363.37
230400
Oil- cake and other solid
residue w/n grnd/ in pllts
form obtained from soya-
bean oil extraction
262.95
332.6
151530
Castor oil and its fractions
212.45
211.45
80132
Cashew nuts fresh/ dried
shelled
178.8
196.88
80610
Grapes fresh
102.76
144.2
120740
Seasmum seeds w/n
broken
118.74
142.62
130232
Muclgs and thickeners
w/n modified derived
from locust beans locust
bean seeds/ guar seeds
177.16
144.51
Total
3875.11
4197.4
Source: Department of Commerce, Govt. of India (2015)
Table IV throws light on the major agricultural
commodities imported in India from the European Union.
Total agricultural commodities imported in India were of
USD 625.73 million in 2012-13, which declined to USD
608.52 million in 2013-14. Whiskies were mostly
imported in India, of worth USD 98.72 million followed
by ethyl alcohol, of worth USD 72.42 million in 2013-14.
Preparations used in animal feeding were of USD 45.23
million in 2013-14 [17].
TABLE IV. INDIA’S TOP AGRI IMPORTS FROM EUROPEAN
UNION
(value in USD million)
Product
HS Code
Commodity
2012-13
2013-14
220830
Whiskies
82.26
98.72
220890
Other under natured ethyl
alcohol
66.81
72.42
230990
Other preparations of a
kind used in animal
feeding
43.02
45.23
150990
Other olive oil and its
fractions (excluding
virgin)
25.36
29.03
170211
Lacts and lacts syrup
containing 99% or more
lacts calculated on the dry
matter
23.19
28.09
180690
Other
20.32
18.25
210690
Other food preparations
16.63
16.54
220820
Sprites obtained by
distilling grape wine/
grape marc
10.8
14.08
121190
Other: seeds
9.81
14.01
220290
Other sweetened
flavoured waters
10.35
13.57
Total
625.73
608.52
Source: Department of Commerce, Government of India (2015)
C. India- EU Agricultural Trade Restrictions
Trade has an integral part in environment and regulation
effect where safety in plant, animal and human health is
given the utmost priority. Countries apply higher food
safety standards on imports than domestic supplies. SPS
measures distort trade by laying down import bans,
prohibitive compliance costs, reducing trade flows and
diverting trade from one trading partner to another trading
partner through standards that discriminate between
individual suppliers [18].
Agricultural trade is growing faster in high value-
products where many technical standards and regulations
are present. These regulations reflect a new era in the food
sector where meeting demands of the consumer and the
producers are strongly recommended. Inability to meet the
regulations of food safety makes trade complex and
controversial. The Dispute Settlement Body of the WTO
plays a critical role in defining such regulations and
solving the conflicts [19]. It was analyzed that increasing
stringency imposed by SPS and technical requirements
hinders food and agricultural trade and creates barriers
which are greater in respects to developing and less
developed countries [20]. Food safety and quality is still a
challenge for a developing country like India. There is a
need to create a strong base in domestic food health and
safety regulations and certification systems according to
international standards. Developing countries find SPS
measures to be a source of tension and friction in

Óbuda University e-Bulletin Vol. 8, No. 1, 2018
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international trade but maintaining such measures can also
create dynamic exports growth for them. So, thereby
establishing a SPS standard facilitates trade by providing
consumer standard food and reducing transaction cost for
the exporters [21].
Table V highlights that nine complaints have been
raised by the European Commission against India, related
to trade of agro and other related agro- products through
the Dispute Settlement Body of the WTO. Cases range
from different agro- products and policies such as wines
and spirits to Export and Import Policy of (1997-2002) to
(2002-2007), custom duties, quantitative restrictions and
patent protection for agricultural chemical products, etc.
[22].
TABLE V. COMPLAINTS RAISED BY EUROPEAN COMMISSION
AGAINST INDIA ON SPS CONCERNS
Dispute
No.
Dispute
Reques
t for
compla
inants
receive
d
Comments
DS380
Certain taxes
and other
measures on
imported wines
and spirits
22
Septem
ber,
2008
EC requested
consultations with India
regarding discriminatory
taxation applied on
imported bottled wines
and spirits by Indian states
Tamil Nadu, Maharashtra
and Goa. This adversely
affected exports of wines
and spirits to India.
DS352
Measures
affecting
importation and
sale of wines
and spirits from
the European
Communities
20
Novem
ber,
2006
EC requested
consultations with India
regarding duties applied
by India and restrictions
on retail sale applied by
Indian state Tamil Nadu
which affected trade of
wines and spirits to India.
DS304
Anti- dumping
measures on
imports of
certain products
from EC
8
Decem
ber,
2003
EC requested
consultations with India
concerning certain
antidumping measures on
imports of 27 products
originating in the EC or its
member states.
DS279
Import
restrictions
maintained
under Export
and Import
Policy 2002-
2007
23
Decem
ber,
2002
EC requested
consultations with India
concerning import
restrictions maintained by
India under its Export and
Import Policy 2002-2007
with respect to particular
products of concern to
EC.
DS150
Measures
Affecting
Customs Duties
30
Octobe
r, 1998
EC requested
consultations with India
concerning a series of
increase in customs duties
allegedly implemented by
India.
DS149
Import
Restrictions
29
Octobe
r, 1998
EC requested
consultations with India
concerning import
restrictions maintained by
India under its Export and
Import Policy 1997- 2002
with respect to particular
products of concern to
EC.
DS120
Measures
Affecting
Export of
Certain
Commodities
16
March,
1998
EC requested
consultations with India in
respect of India’s Exim
Policy (1997-2002),
which allegedly set up
negative list for export of
several commodities like
raw hides and skins which
were listed as products
which required export
licence.
DS96
Quantitative
restrictions on
imports of
agricultural
textile and
industrial
products
18 July,
1997
EC raised issues in respect
to India’s quantitative
restrictions on imports of
agricultural, textile and
industrial products. EC
also alleged violations of
Articles 2.3 and 5 of SPS
Agreement. It was
mutually agreed on 6
May, 1998.
DS79
Patent
Protection for
Pharmaceutical
and Agricultural
Products
28
April,
1997
EC requested
consultations with India in
respect of alleged absence
of patent protection in
India for pharmaceutical
and agricultural chemical
products and absence of
formal systems that
permit filling of patent
applications etc.
Source: Compiled from WTO (2016)
Table VI - highlights that there are five cases raised by
India against the European Commission related to trade of
agro and other related agro- products through the Dispute
Settlement Body of WTO. Cases were from restrictions on
trade of rice to anti-dumping regulations, etc. [22].
TABLE VI. COMPLAINTS RAISED BY INDIA AGAINST
EUROPEAN COMMISSION ON SPS CONCERNS
Dispute
No.
Dispute
Request
for
complaina
nts
received
Comments
DS385
Expiry reviews
of anti-
dumping and
countervailing
duties Imposed
on imports of
PET from India
4Decemb
er, 2008
India requested
consultations with the
EC that EC’s basic anti-
dumping regulation
were inconsistent
DS246
Conditions for
the granting of
preferences to
5 March,
2002
India requested
consultations with EC
concerning the
conditions under which

K. Chandan et al. Indo- EU Agricultural Trade: Trade Restrictions and SPS Measures
– 18 –
developing
countries
EC accorded tariff
preferences for (i)
combating drug
production and
trafficking
(ii) for protection of
labour rights and
environment, creating
undue difficulties for
India’s exports to the
EC.
DS141
Anti- dumping
duties on
imports of
cotton- type bed
Linen from
India
8 March,
2002
Same in respect to
DS140.
DS140
Anti- dumping
investigations
regarding
unbleached
cotton fabrics
from India
3 August,
1998
India requested
consultations with EC in
respect of alleged
repeated recourse by the
EC to anti- dumping
investigations on
unbleached cotton
fabrics (UCF) from
India.
DS134
Restrictions on
certain import
duties
27
May,1998
India requested
consultations with EC in
respect of restrictions
allegedly introduced by
an EC Regulation
establishing so called
cumulative recovery
system for determining
certain import duties on
rice with effective from
1 July, 1997. India
contended that measures
introduced through this
regulation would restrict
number of importers of
rice from India.
Source: Compiled from WTO (2016)
As per the Trade and Investment Barriers Report (TIBR)
2015 some of the strategic partners of the European Union
(India also being a member country) continues to maintain
a variety of significant trade and investment barriers which
have become difficult to tackle. In the current context of
economic uncertainty there is a great risk that many
emerging barriers will persist and be established [23].
There were- five Indian unjustified SPS measures which
negatively affected EU exports of agriculture and fishery
products into India. Since 2004, the EU has consistently
raised many issues with India and other trading partners
related to SPS concerns. Ongoing barriers on Indian SPS
measures for agriculture and agro related products from
the EU side are as follows:
1. Indian unjustified SPS import conditions related to dairy
products
SPS Measure: (Public health reasons)
Creation Date: 8 Jan 2013
Products:
a. HS (0401)- milk and cream, not concentrated
not containing added sugar or other sweetening
matter
b. HS (0402)- milk and cream, concentrated or
containing added sugar or other sweetening
matter
c. HS (0403)- buttermilk, curdled milk and cream,
yogurt, kephir and other fermented or acidified
milk and cream, whether or not concentrated or
containing added sugar or other sweetening
matter or flavoured or containing added fruit,
nuts or cocoa
d. HS (0404)- whey, whether or not concentrated or
containing added sugar or other sweetening
matter; products consisting of natural milk
constituents, whether or not containing added
sugar or other sweetening matter, not elsewhere
specified or included
e. HS (0405)- butter and other fats and oils derived
from milk; dairy spreads
f. HS (0406)- cheese curd
Issue: India’s import conditions for dairy products
includes many measures which are trade restrictive and not
as per the international standards of World Animal Health
Organisation and Codex Alimentarius. For example- it
requires certification of imported milk and that milk
products should also be heat treated. It also does not allow
import of raw milk or raw milk products. The EU raised
this issue and highlighted that it applies the international
measures from farm to fork which were in respect of
Hazard Analysis and Critical Control Points (HACCP)
principles covering the production chain and strict control
on animal health, guaranteeing that products were safe.
The EU suggested changes in India’s WTO SPS
legislations for new import conditions of milk and milk
products. The SPS Agreement requires WTO members to
base its SPS measures on international standards and when
deviating from international standards, a risk analysis
should be carried out.
2. Restrictions on imports of plants and plant products
relating to lengthy procedures for establishing import
requirements
SPS Measure: Risk analyses including Pest Risk
Analysis (PRA)
Creation Date: 28 April 2011
Products affected:
a. HS (08)- edible fruit and nuts; peel of citrus fruit
and melons
b. HS (09)- coffee, tea, mate and spices

Óbuda University e-Bulletin Vol. 8, No. 1, 2018
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c. HS (06)- live trees and other plants; roots and the
like; cut flowers and ornamental foliage
d. HS (07)- edible vegetables and certain roots and
tubers
Issue: EC highlighted that India had lengthy and many
bureaucratic procedures for import of plants and plant
products which acted as trade restrictive. India has also not
established a list of regulated pests which were of concern
to India as required by International Plant Protection
Organisation (IPPC). Thus PRA created more barriers for
the EU to trade with India. India has provided access to
only limited plants and plant products.
3. Restrictions on imports of bovine semen
SPS Measure: Animal health reasons
Creation Date: 28 April 2011
Products Affected:
a. No product linked to this barrier
Issue: India had published a regime for ‘health protocol for
live bovine embryos and bovine semen. The EU pointed
out that India had not considered many of the EU’s
comments in final version of health certificates and
neglected scientific justifications of World Organisation
for Animal Health (OIE). The EU pointed out that India’s
absence of control on certain diseases related to bovine
resulted to import restrictions.
4. Restrictions on imports of plants and plant products
relating to fumigation treatments
SPS Measure: Avian Influenza (AI)
Creation Date: 31 August 2004
Products Affected:
a. HS (07)- edible vegetables, certain roots and
tubers
b. HS (0701)- potatoes (fresh or chilled)
Issue: India requires treatment with methyl bromide (MB)
on many of its plant products prior to export, but according
to the regulations of IPPC, MB should not be used. India
also allows alternative treatments for its competent
exporting countries on condition that these treatments are
as efficient as MB. The EU does not allow treatments with
MB. Even if treatment is part of import legislation,
alternative options should be available for exporters. The
EU raised that India should also grant same alternative
treatment other than MB to EU and provide complete
information of pests of plant products for treatment with
MB.
5. India- Live birds and their products
SPS Measure: Avian Influenza (AI)
Creation Date: 13 May 2004
Products Affected:
a. HS (0105)- live poultry, fowls of the species
Gallus domesticus, ducks, geese, turkeys and
guinea fowls
b. HS (01)-live animals
Issue: India started an import ban in 2004 on animals and
a range of animal products from the whole territory of a
member state due to risks of Highly Pathogenic Avian
Influenza (HPAI). In 2007, ban was extended to include
low pathogenic Avian Influenza of H5 or H7 subtypes.
These measures are revised on a six- month basis. The
latest of these revision lead to liberation of products from
ban such as heat treated poultry meat and processed and
unprocessed pork meat. However, India still has a ban in
place for live pigs and many products which should not be
banned according to the standards of avian influenza of
World Organisation for Animal Health. The EU raised this
issue many times [24].
D. Recent Agricultural Trade Restrictions
Horticulture products are more prone to trade barriers
created by sanitary and phyto- sanitary measures.
Reduction in such barriers including subsidies and tariffs
on agricultural commodities has wider global implications
[25]. Even after opening up the Indian agricultural market
for trade ever since the establishment of WTO took place,
distortions continue to exist in India due to some actions
of developed nations [26].
One of the important categories of India’s agricultural
exports, i.e. ‘items of future potential’ which included
fruits and vegetables has undergone some recent
complications due to SPS concerns raised by the
developed countries. The most recent restriction is related
to Alphonso mangoes and four vegetables namely
eggplant (Solanum melongena), taro plant (Colocasia sp),
bitter gourd (Momordica sp) and snake gourd
(Trichosanthes sp). The EU had put a ban on the import of
Alphonso mangoes and four vegetables from India from
May 1, 2014. This decision came when the Standing
Committee on Plant Health of the EU found 207 Indian
consignments contaminated by pests such as fruit flies and
other quarantine pests. India regarded this measure as a
‘pre- mature’ and ‘unfair’ act of the EU. Indian mango
business is worth six million pounds per year in the United
Kingdom and about 160 lakh mangoes are exported to the
United Kingdom itself. The reason behind the ban was that

K. Chandan et al. Indo- EU Agricultural Trade: Trade Restrictions and SPS Measures
– 20 –
the introduction of pests through imports from India would
create a threat to the European agriculture and production
by cross- contamination to European crops. It could also
threaten the country’s salad crop “industry of tomato and
cucumber,” which was of GBP 321 million. The EU
accounts for more than 50 percent of total exports of fruits
and vegetables from India. With this ban mango exports to
the EU decreased from $8.9 million in 2013-14 to $1.07
million in April-September 2014-15. Exports of mangoes
from India in overall declined from $307.38 million in
April- November 2013 to $291.43 million in April-
November 2014. One of the impacts falling on Indian
economy was that huge amount of mangoes in India would
lead to reduction in mangoes prices and a loss to domestic
farmers. There will be also a reduction in business, loss of
revenues and the wastage of mangoes. The ban was
supposed to last till December 2015 but after nine months
of persistent persuasion by India, the EU lifted its ban on
imports of Indian mangoes on January 20, 2015 only after
an inspection team audited the Indian packing houses in
September 2014. The European Union had earlier put the
ban till December, 2015. It lifted the ban on only import
of mangoes but still the ban on the four vegetables
continued until the pest control measures were applied and
satisfied by the EU food safety inspection team. Later, by
the end 2016 the ban on these vegetables was removed [27,
28].
One more restriction aroused in 2010 when table grape
exports from India to the EU countries collapsed due to
rejections of consignments on the grounds of SPS
measures. In 2009, the EU had come up with new
regulations on pesticides where chemicals to be monitored
were raised from 98 to 167. Indian exporters were unaware
of this new rule and so they had to face rejection. Indian
grapes exported to the EU were 37,000 tons in 2009 which
declined to 8,326 tons in 2012 and 6,360 tons in 2011. This
led to heavy losses to Indian farmers which shifted their
grapes market in their own domestic market and towards
West Asian Gulf countries [29].
Also, from 1998 to 2000, exports of Indian dry chilli to
some of the EU countries like Germany, Italy, Spain and
the United Kingdom were rejected due to presence of
aflatoxin. Then in July 2007, the European Commission
issued a health warning when high levels of dioxins were
found in guar gum from India, which was a thickening
agent used in many processed foods [30].
Table VII and VIII shows that India has revealed
comparative advantage in lac, gums, resins, vegetable aps;
cotton; cereals; vegetable planting materials, vegetable
products; coffee, tea and spices; tobacco and fish during
the period of 2011-2014 whereas the EU has revealed
comparative advantage in almost all the products, but
mainly in live trees, plants, bulbs, roots, cut flowers;
beverages, spirits and vinegar; cereals and live animals
[31].
Table IX identifies that there are many products, which
have more potential for trade between India and the EU,
which was calculated with the help of export specialization
index. The value greater than 1 indicates a high
specialization in that particular product. Products such as
rice, cotton; lac, gums, resins, vegetable aps and extracts;
cereals have high trade potential between India and the EU
[31].
TABLE VII. RCA OF INDIA
Prod
uct
code
Product
2011
2012
2013
2014
01
Live animals
0.037
0.017
0.029
0.031
02
Meat and edible meat
offal
1.379
1.682
2.122
0.015
03
Fish
0.200
2.148
2.658
2.835
04
Dairy products, eggs,
honey, edible animal
product nes
0.159
0.234
0.433
0.292
05
Products of animal
origin, nes
1.301
0.834
0.476
0.643
06
Live trees, plants,
bulbs, roots, cut
flowers etc
0.204
0.235
0.200
0.194
07
Edible vegetables and
certain rots and tubers
0.972
0.924
1.176
1.005
08
Edible fruit, nuts, peel
of citrus fruit, melons
0.995
0.974
0.942
0.928
09
Coffee, tea, mate and
spices
3.462
3.530
3.560
3.366
10
Cereals
2.744
4.547
5.200
5.008
11
Milling products,
malt, starches,
insulin, wheat gluten
0.449
0.753
0.914
0.951
12
Oil seed, oleagic
fruits grain, seed,
fruit, etc, nes
1.349
1.200
1.031
1.263
13
Lac, gums, resins,
vegetable aps and
extracts nes
17.14
1
32.29
18.31
7
15.73
8
14
Vegetable planting
materials, vegetable
products nes
3.761
5.306
4.426
3.699
15
Animal, vegetable
fats and oils, cleavage
products
0.566
0.561
0.548
0.550
16
Meat, fish and
seafood preparations
nes
0.226
0.112
0.134
0.172
17
Sugars and sugar
confectionery
2.306
2.614
1.266
1.665
18
Cocoa and cocoa
preparations
0.040
0.077
0.104
0.150
19
Cereal, flour, starch,
milk preparations and
products
3.613
0.428
0.418
0.426
20
Vegetable, fruit, nut,
etc food preparations
0.375
0.422
0.417
0.485
21
Miscellaneous edible
preparations
0.466
0.558
0.497
0.517

Óbuda University e-Bulletin Vol. 8, No. 1, 2018
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22
Beverages, spirits and
vinegar
0.158
0.207
0.215
0.198
23
Residues, wastes of
food industry, animal
fodder
2.533
2.267
2.527
1.463
24
Tobacco and
manufactured
tobacco substitutes
1.906
1.407
1.409
1.350
52
Cotton
6.251
8.015
8.749
8.221
Source: Author’s computations based on data available from ITC UN
Comtrade (2015)
TABLE VIII. RCA OF EUROPEAN UNION 28
Prod
uct
code
Product
2011
2012
2013
2014
01
Live animals
1.825
1.838
1.835
1.791
02
Meat and edible meat
offal
1.445
1.477
1.678
1.335
03
Fish
0.699
0.690
0.678
0.680
04
Dairy products, eggs,
honey, edible animal
product nes
1.938
1.961
1.910
1.922
05
Products of animal
origin, nes
1.177
1.186
1.148
1.106
06
Live trees, plants,
bulbs, roots, cut
flowers etc
3.044
3.180
3.092
3.092
07
Edible vegetables and
certain rots and tubers
1.205
1.302
1.287
1.219
08
Edible fruit, nuts, peel
of citrus fruit, melons
9.819
1.006
0.997
0.947
09
Coffee, tea, mate and
spices
0.633
0.685
0.702
0.723
10
Cereals
0.694
0.682
0.751
0.730
11
Milling products,
malt, starches,
insulin, wheat gluten
1.273
1.299
1.324
1.367
12
Oil seed, oleagic
fruits grain, seed,
fruit, etc, nes
0.549
0.526
0.489
0.457
13
Lac, gums, resins,
vegetable aps and
extracts nes
0.928
0.650
0.882
0.974
14
Vegetable planting
materials, vegetable
products nes
0.395
0.569
0.457
0.457
15
Animal, vegetable
fats and oils, cleavage
products
0.728
0.783
0.874
0.837
16
Meat, fish and
seafood preparations
nes
1.079
1.066
1.078
1.110
17
Sugars and sugar
confectionery
0.779
0.888
0.881
0.936
18
Cocoa and cocoa
preparations
1.553
1.554
1.649
1.604
19
Cereal, flour, starch,
milk preparations and
products
1.799
1.835
1.807
1.853
20
Vegetable, fruit, nut,
etc food preparations
1.422
1.447
1.431
1.451
21
Miscellaneous edible
preparations
1.581
1.581
1.534
1.522
22
Beverages, spirits and
vinegar
1.977
2.035
1.990
2.001
23
Residues, wastes of
food industry, animal
fodder
1.058
1.037
1.048
1.043
24
Tobacco and
manufactured
tobacco substitutes
1.572
1.493
1.431
1.458
52
Cotton
0.370
0.358
0.324
0.352
Source: Author’s computations based on data available from ITC UN
Comtrade (2015)
TABLE IX. EXPORT SPECIALIZATION INDEX BETWEEN INDIA
AND EUROPEAN UNION
Prod
uct
Cod
e
Product
2011
2012
2013
2014
01
Live animals
0.026
0.011
0.019
0.021
02
Meat and edible meat
offal
1.132
1.351
1.712
1.820
03
Fish
1.702
1.869
2.314
2.456
04
Dairy products, eggs,
honey, edible animal
product nes
0.105
0.151
0.278
0.192
05
Products of animal
origin, nes
0.933
0.578
0.511
0.477
06
Live trees, plants,
bulbs, roots, cut
flowers etc
0.112
0.126
0.108
0.106
07
Edible vegetables and
certain rots and
tubers
0.745
0.648
0.864
0.732
08
Edible fruit, nuts,
peel of citrus fruit,
melons
0.689
0.667
0.618
0.630
09
Coffee, tea, mate and
spices
2.688
2.574
2.623
2.507
10
Cereals
4.509
7.334
8.031
7.770
1006
Rice
28.61
0
47.61
3
50.49
4
48.86
3
11
Milling products,
malt, starches,
insulin, wheat gluten
0.512
0.812
0.941
1.060
12
Oil seed, oleagic
fruits grain, seed,
fruit, etc, nes
1.562
1.451
1.243
1.611
13
Lac, gums, resins,
vegetable aps and
extracts nes
19.65
5
51.93
4
24.07
8
15.57
0
14
Vegetable planting
materials, vegetable
products nes
3.341
3.216
2.812
2.356
15
Animal, vegetable
fats and oils,
cleavage products
0.634
0.597
0.519
0.537
16
Meat, fish and
seafood preparations
nes
0.164
0.081
0.096
0.122
17
Sugars and sugar
confectionery
2.688
2.772
1.256
0.820
18
Cocoa and cocoa
preparations
0.024
0.049
0.062
0.088
19
Cereal, flour, starch,
milk preparations and
products
0.297
0.315
0.308
0.320
20
Vegetable, fruit, nut,
etc food preparations
0.131
0.139
0.138
0.158

K. Chandan et al. Indo- EU Agricultural Trade: Trade Restrictions and SPS Measures
– 22 –
21
Miscellaneous edible
preparations
0.365
0.430
0.392
0.422
22
Beverages, spirits
and vinegar
0.124
0.164
0.169
0.156
2204
Wines of fresh grapes
0.006
0.005
0.008
0.008
23
Residues, wastes of
food industry, animal
fodder
1.868
1.643
1.863
1.094
24
Tobacco and
manufactured
tobacco substitutes
0.785
1.000
1.050
1.002
52
Cotton
15.33
9
21.56
1
23.84
3
20.43
8
Source: Author’s computations based on data available from ITC UN
Comtrade (2015)
IV. IMPLICATIONS
The business environment between India and the EU
should ensure product compliance with quality and
sanitary and phytosanitary measures. In respect to India,
proper implementation of the already running project
named National Integrated Fruit Fly Surveillance through
the Directorate of Plant Protection Quarantine & Storage
to establish pest- free fruit flies areas for production and
quality exports could bring more benefits. Trade rules
should be made more flexible in nature to facilitate the
participation of countries in the SPS measures. The
effectiveness of agricultural trade depends much on the
respective food authorities of the countries. The present
need is to meet the SPS requirements at a global level by
firstly getting approval from certified authorities. At the
same time meeting additional requirements of a private
standard should be made compulsory. There is a need to
establish special pack- houses for export quality farm
produce and maintaining internationally- acceptable
standards of grading, cleaning and preservation
techniques. Training of the farmers so that insects could be
eliminated in the initial stage would be more appropriate.
Post- harvest facility will assist with maintaining the safety
of the produce. Countries should adopt a ‘precautionary
principle or a kind of ‘safety first’ approach, which could
result in higher standards. Thus proper ‘pre- export
checks’ in which a country checks the pesticides levels in
the product before it is shipped could increase exports.
V. CONCUSIONS
Results show that the trade intensity index of India with
the European Union and of the European Union with India
is less than 1, which indicates that bilateral trade is smaller
than expected given the partner country’s importance in
world trade (as evident in table I). India’s exports of agro
products to the EU are found to be more (as pointed out in
table II). Shrimps and frozen prawns; followed by cuttle
fish and squids are exported most to the EU from India (as
depicted in table III). Among all the agro- products
imported from the EU in India, whiskies are the most
important one (as depicted in table IV). The numbers of
complaints raised by the EU against India in the dispute
settlement body for SPS measures are more compared to
India’s complaints against the EU (as presented in table V
and table VI). The EU has also pointed out many
categories of SPS measures adopted by India which
restricted agro- exports of the EU to India. RCA index
results reveal that the EU countries have revealed a
comparative advantage in almost all the agro- products
mainly in live trees and beverages and spirits whereas
India has a comparative advantage in lac, gums, cotton,
cereals (as illustrated in table VII and VIII). Results of the
export specialization index show that many products have
a higher export potential between India and the EU such
as cotton; rice; lac, gums, resins and vegetables (as shown
in table IX). This study accepts the hypothesis 1 that India-
EU agro- trade is untapped. This was tested through a RCA
index. The study rejects the hypothesis 2 that India’s SPS
measures are restricting the EU because through this
particular research many restrictions were found from the
EU side, also, which have hindered India’s agro- trade.
The study lastly accepts the hypothesis 3 that India and the
EU both can grow through increasing trade. This was
accepted after identifying international competitiveness
present in different products between both the trading
partners through export specialization index. The entire
analysis points out that India has tremendous benefits if it
adopted internationally accepted quality standards. Higher
rates of tariffs over wines and spirits by India are still a
major issue raised by the EU for its reduction. Thus, both
the trading partners should maintain a positive trade
relationship by promoting proactive trade measures
through the reduction in non- tariff measures.
The results of this study explicitly conclude that
standards have emerged as complex barriers today and
impediments to agro and food exports. This can be reduced
through the emphasis on proactive strategies in order to
exploit potential benefits. With being proactive, both
trading partners can gain access to financial and technical
resources by upgrading standards and a significant level of
the market. Research recommends that anticipating and
applying standards within time and participating in the
creation of standards by making commercial shifts in the
markets, can give more returns.
ACKNOWLEDGMENT
The authors are highly thankful to the anonymous referees
for providing useful comments and suggestions for
improving the paper. This study was carried out as a part
of research work at the Department of Humanities &
Social Sciences (HSS), IIT Patna, India. Results and
conclusions reached are those of the authors’ and do not
represent of any other. This work was supported by the

Óbuda University e-Bulletin Vol. 8, No. 1, 2018
– 23 –
UGC Rajiv Gandhi National Fellowship New Delhi, India.
Authors also acknowledge the support provided by
anonymous for linguistic checking of the manuscript.
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