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EU says euro will bolster India, Third World; Brittan to tour India from April 6

Sudipt Arora in Brussels

The introduction of euro will boost economies of countries belonging to the European Union which will in turn benefit exporters of the Third World countries like India.

This was stated by Patrick Child, spokesperson for EU's trade commissioner Cab de Silguy.

''The EU comprises 220 million consumers,'' said Child. ''The euro's usage will encourage exporters from developing countries to increase investments and expand their subsidiaries across Europe.''

Child said the EU believes in open markets and free trade across the globe. The euro will create new financial markets and enthuse more liquidity into those in existence.

''There will be new opportunities to use the euro as an alternative currency for investments and credits,'' he said. For instance, the euro was used almost as much for international bond issues as the US dollar in first three months of this year.

Significantly, Child said, the euro will minimise risks in regard to currency fluctuations and bring about more stability in international financial markets. At present, the situation is lop-sided with the US dollar being widely considered as the international currency.

''With the euro acquiring a significant role in global monetary order, the rules of the game could change. We envision the euro emerging as a world currency which better corresponds to economic and commercial position of the EU in the global economy.''

Child said the euro will give greater incentive to international financial institutions for having more coordination among different trading blocs and help limit macro-economic differences which are often at the origin of exchange rate disturbances.

The euro as a currency with a place on the world scene could better correspond to the leading economic and commercial position of the EU. It would help in seeking a more robust international financial architecture, he said.

This may enable the EU to play more effective and transparent role in preventing financial meltdowns like it happened recently in the southeast Asia.

''With the euro's arrival, we are going to have a more balanced financial system rather than having a single currency in the leading position. It will provide more stability in the environment in which financial markets operate and help countries in managing their domestic policies which limit the possibilities of a financial crisis in the future.''

The competitiveness of Indian exporters shipping raw materials to the EU will increase with the increasing use of euro, Child said.

He said Japan also recognises that Europe will play a major role in the development of the global economy. Other Asian and African countries, besides those in the Mediterranean, are in a better position than say Latin American nations to adopt the euro, Child added.

The EU accounts for about 28 per cent of India's imports and 25 per cent of exports. In 1997, the two-way trade between India and the EU totalled 18.3 billion euros (about Rs 800 billion).

A number of projects are underway to further improve bilateral trade relations. A recent example was the EU-India conference in New Delhi which brought together 300 european and 350 Indian small and medium enterprises.

Meanwhile, vice-president of the European Commission, Leon Brittan, has confirmed his visit to India from April 6 to 8. He will discuss the entire spectrum of bilateral relations and present the EC's viewpoint on the millenium round at the World Trade Organisation.

His visit is part of a high-level dialogue initiated at the EU-India joint commission last year, said Matthew Cocks, member of cabinet at the EC who will accompany Brittan. The EC is executive body of the 15-member European Union.

In New Delhi, Brittan will meet Finance Minister Yashwant Sinha, Commerce Minister Ramakrishna Hegde, Industries Minister Sikander Bakht, president of the Confederation of Indian Industry Rajesh Shah and president of the Federation of Indian Chambers of Commerce and Industry Sudhir Jalan.

In Bombay, Brittan will meet governor of the Reserve Bank of India Bimal Jalan besides Indian and European businessmen at a meeting hosted by the Council of EU Chambers of Commerce.

Cocks said the EU wants India to participate in the millenium round of talks at Geneva. At present, India is opposed to the proposal. Brittan will present the EU's case to Indian officials in an effort to muster India's support.

''India is an important player at the WTO and we've some key issues to sort out,'' Cocks said.

UNI

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