Agreement on
South Asia
Free Trade Area (SAFTA)
The Agreement on South
Asian Free Trade Area (SAFTA) was signed by all the member states of the
South Asian Association for Regional Cooperation (SAARC), namely,
India,
Bangladesh,
Bhutan,
Maldives,
Nepal,
Pakistan and
Sri Lanka, during the Twelfth SAARC Summit
held in
Islamabad on
4-6th January, 2004 . SAFTA, along with its four
annexes, has come into force from
1st
January, 2006.
India,
Pakistan and
Sri Lanka are categorized as Non-Least
Developed Contracting States (NLDCS) and
Bangladesh,
Bhutan,
Maldives and
Nepal are categorized as Least Developed
Contracting States (LDCS).
2. Article 7 of the SAFTA Agreement
provides for a phased tariff liberalization programme (TLP) under which, in
two years, NLDCS would bring down tariffs to 20%, while LDCS will bring them
down to 30%. Non-LDCS will then bring down tariffs from 20% to 0-5% in 5
years (Sri Lanka 6 years), while LDCS will do so in 8 years. NLDCs will
reduce their tariffs for L.D.C. products to 0-5% in 3 years. This TLP
covers all tariff lines except those kept in the sensitive list (negative
list) by the member states.
3. The salient features of the four
Annexes of SAFTA Agreement are as under:
(i) Rules of Origin:
(a) For
giving preferential access to the Member Countries under
SAFTA, the goods shall have undergone substantial manufacturing process in the
exporting countries. The substantial manufacturing process are defined in
terms of twin criteria of Change of Tariff Heading (CTH) at four-digit
Harmonized Coding System (HS) and value content of 40% (30% for LDCSs).
(b) Apart from the general rules it provides for Products-Specific
Rules (PSR) for 191 tariff lines to accommodate the interest of LDCSs given
their limited base for natural resources and undiversified industrial
structure. The Products Specific Rules have been provided clearly on
technical grounds i.e. where both inputs and outputs are at the same
four-digit HS level.
(ii) Sensitive Lists:
The summary of the Sensitive Lists are as under:
|
Sl.No. |
Name of the Contracting States |
No
of tariff lines for LDCS |
No
of tariff lines for Non-LDCS |
Consolidated list |
|
1 |
Bangladesh |
1249 |
1254 |
------- |
|
2 |
Bhutan |
----- |
----- |
137 |
|
3 |
India |
744 |
865 |
------ |
|
4 |
Maldives |
-- |
-- |
671 |
|
5 |
Nepal |
-- |
--- |
1335 |
|
6 |
Pakistan |
-- |
--- |
1183 |
|
7 |
Sri Lanka |
---- |
------ |
1065 |
(b)
India has offered
Bangladesh market access for 8 million pieces
of garments; 3 million pieces with the condition of sourcing fabrics from
India, an additional three million
garments with the condition of using fabrics of either Indian or
Bangladesh origin and a further two million
pieces without any condition.
(iii). Mechanism for
Compensation of Revenue Loss (MCRL) for the Least Developed Contracting States
:
(a) The
compensation to LDCSs, except to
Maldives, would be available for four years;
to
Maldives it would be for six years.
(b)
The compensation would be in the form of grant in US dollar.
(c)
The compensation would be subject to a cap of 1%, 1%, 5% and 3% of customs
revenue collected on non sensitive items under bilateral trade in the base
year, i.e., average of 2004 and 2005.
The
compensation shall be administered by the Committee of Experts as per the
Administrative Arrangements defined in this Annex.
(iv). Technical Assistance to Least Developed Contracting States in
agreed areas.
The main areas covered are - capacity building in standards, product
certification, training of human resources, data management, institutional
upgradations, improvement of legal systems and administration, customs
procedures and trade facilitation, market development and promotion.
Implementation of SAFTA Agreement:
a) SAPTA concessions would cease
for the LDC Member States once the Non-LDCSs complete the Trade Liberalization
Programme (TLP) for LDCSs within three years. If any items, on which SAPTA
concessions are available to LDCSs, appear in the Sensitive List of Non-LDCSs,
they shall maintain the same level of concessions through derogation under
Article 7(3)(a) and indicate the same in their respective Sensitive Lists,
and if the items under TLP enjoy tariff preferences under SAPTA, the Non-LDCS
shall reduce their tariff on those items to a rate not higher than the rate
applicable for LDCS under SAPTA on the date agreed for base rate for TLP.
b) The base rate for the purpose of
tariff reduction would be MFN applied rate existing as on
1st January 2006.
c) Commencement of TLP: In view of
different budget period of Member States, instead of 1 January, 2006, the
member states decided to give effect to the phased tariff liberalization
programme with effect from 1st July 2006 (Nepal from 1st
August 2006) with the condition that the TLP for the first two years would be
completed by 31st December, 2007.
India had notified tariff concessions for the
first installment (1 July 2006 to 31.12.2006) in respect of the first phase
vide customs notifications Nos. 67/2006, 68/2006 and 69/2006 and for the
second installment in the first phase (with effect from 1.1.2007) vide
Customs notifications No. 140/2006 and 141/2006. The notifications issued
by Pakistan for the first and second installments have a rider that Indian
imports into Pakistan would continue to be as per their Positive List of
importable items from India which at present consists of 1075 tariff lines.
For more details of this Agreement Visit SAARC website
http://www.saarc-sec.org.
***
Agreement on India-Bhutan
Trade & Commerce
The Agreement on Trade and
Commerce between India and Bhutan
was concluded in 17.1.1972. It has been renewed periodically, with
mutually agreed modifications. The current Agreement between the two countries
on Trade, Commerce and Transit was renewed on
28th July 2006 and
operational from 29 July 2006 for a period of 10
years.
SALIENT
FEATURES OF THE AGREEMENT
i) Free trade and commerce between the two
countries.
ii)
Bhutan may, however, impose
non-tariff restrictions on import of certain goods of Indian origin for
protection of their industries.
iii) No restrictions by
India on Bhutan’s trade with third
countries; Under the Agreement India provides for 16 exit/entry points for
this purpose.
iv) Both sides may impose non-tariff restrictions on
import of third country goods from each other’s territory;
v) Trade transactions in Indian rupees or Bhutanese
Ngultrums. With effect from 3.3.1994,
India has also allowed export of
goods to Bhutan, under bond, against payment in free foreign exchange, with
duty exemptions as for third country exports;
vi) Mutual refund annually of the excise duties on
goods exported to each other;
The new agreement also provides for movement of Bhutanese
goods from one part of
Bhutan to another part of Bhutan through India.
***
INDIA-Sri Lanka Free Trade
Agreement
There is a bilateral Free Trade Agreement (ISLFTA) with
Sri Lanka which has been signed on 28.12.98.
Under this Agreement, both countries are committed to the elimination
of tariffs in a phased manner. ISLFTA became operational from March 2000.
Under the FTA, tariff on a large number of
items are phased out within an agreed time frame except in the Negative List.
As per the provisions of the ISLFTA, India has already completed its tariff
liberalisation programme on 18th March, 2003 whereas Sri Lanka’s tariff
liberalisation programme would be completed in the year 2008. The two sides
also maintain Negative Lists of items on which TLP are not applicable. India
has 429 tariff lines in its Negative List, whereas Sri Lanka has kept 1180
items in the Negative List.
Now, both Government of India and Sri Lanka
are negotiating on a Comprehensive Economic Partnership Agreement (CEPA) to
build upon the ISLFTA by deepening and widening the coverage by including
Trade in Services, Investment Economic Cooperation etc.
Trade Agreement between India and Bangladesh
A bilateral trade agreement was signed between India and Bangladesh on 4.10.80
for a period of three years with provision for extension of three years by
mutual consent subject to such modifications as agreed upon. Its validity has
been extended from time to time. An amended Trade Agreement was signed on
21.03.2006 which came into force from 1.4.2006 and presently the agreement is
valid till 31.03.2009. This Agreement provides for the following :
(a) expansion of trade and economic
cooperation,
(b) making mutually beneficial
arrangement for the use of waterways, railways and roadways,
(c) passage of goods between
two places in one country through the territory of the other,
(d) exchange of business and trade
delegations and consultation to review the working of the Agreement at least
once a year, etc.
***
Trade Agreement between India
and Maldives
India and
Maldives
signed Trade Agreement on
31st March, 1981
which shall progressively remain in force until it is modified or terminated
by either country on giving three months` notice to the other.
The Agreement provides for Most Favoured Nation (MFN) treatment to each other
in trade and merchant vessels, promotion of commercial and technical
cooperation through exchange of delegations and participation in trade fairs
and exhibitions and supply of essential commodities by Government of India to
Government of Maldives on annual quota.
All payments between
India
and Maldives are in freely convertible currency, subject to their foreign
exchange regulations.
All payments between
India
and Maldives are in freely convertible currency, subject to their foreign
exchange regulations.
As per the provisions of Articles VIII and IX of the Agreement India supply
essential commodities annually as per the request of
Maldives.
These commodities usually consist of Eggs, Potatoes, Onion, Rice, Wheat Flour,
Sugar, River Sand and Aggregate.
***
INDIA-NEPAL Treaty of Trade
Treaty of Trade:
The bilateral trade between India and Nepal is
regulated by the Treaty of Trade. The current Treaty has been in force for a
period of five years with effect from 6.3.2002. Presently, this Treaty were to
expire on 6th March, 2007.
Hence, both Governments of Nepal and India have decided to renew the Treaty in
its current form with effect from 6th March, 2007. Both sides are
also engaged in mutual consultation process to amend the treaty of trade and
once this process is over, the amended Treaty of Trade shall replace the
existing Treaty, after necessary approval. Pending completion of the
process for its renewal with certain amendments proposed, the validity of the
Agreement would continue till a new Treaty comes into force. Under this
Treaty, there is free trade on mutually agreed to primary products from each
other as indicated in Protocol to Article IV of the Treaty. In the case of
industrial goods produced in Nepal, Article V of the Treaty provides for India
to give, on a non-reciprocal basis, duty-free access to Nepalese goods without
any quantity restriction. This is subject to fulfilling the twin criterion of
four-digit tariff head change and value addition of 30% at ex-factory price in
Nepal. This duty-free access is, however, restricted to annual quotas on four
sensitive items in the interest of the domestic industries in these sectors.
These are vanaspati (one lakh metric tones), Copper products and Acrylic Yarn
(Ten thousand metric tones each) and Zinc Oxide (2500 metric tones). The
routes for bilateral trade can be mutually decided; in the present Treaty,
twenty two mutually agreed routes are prescribed for bilateral trade. The
Treaty provides for setting up Joint Committee in the event the imports under
the Treaty result in injury to the domestic industry in each country.
Treaty
of Transit: India provides transit
facilities to the landlocked Nepal under the Treaty of Transit. The current
Treaty which was renewed in January 2006 would be in force for a period of
seven years up to 5.1.2013. This Treaty provides for free movement of
traffic-in-transit across territories of each other through mutually agreed
routes for trade with third countries subject to taking measures to ensure
that this does not infringe legitimate interests/security interests of each
other. Traffic in transit is exempted from customs/all transit duties. The
Treaty provides for exit/entry points as may be mutually agreed upon. India
has allowed 15 transit routes to Nepal but so far not availed of this facility
from Nepal. Merchant ships of Nepal is accorded treatment no less favourable
than that accorded to ships of any other foreign country. Presently Kolkata/Haldia
are the operational entry points for Nepal’s trade with third countries. They
have requested for similar facilities at Mumbai and kandla.
Agreement of Cooperation to Control
Unauthorized Trade: India and Nepal have also signed
an Agreement of Cooperation to Control Unauthorized Trade between the two
countries. This Agreement was last renewed for five years with effect from
6.3.2002. The objective of this Agreement is to check illegal trade
(smuggling) between the two countries. This Agreement has also been renewed
w.e.f. 6.3.2007 in its present form.
Inter- Governmental Committee (IGC) at
Commerce Secretary-level: Both countries have established a forum known as Inter- Governmental
Committee at Commerce Secretary-level to address the problems relating to
bilateral trade, transit facilities and prevention of Unauthorized Trade which
meet as often as required.
***
India-Afghanistan Preferential Trade Agreement
A Preferential Trade Agreement was signed
between India and Afghanistan on March 6, 2003 in
New Delhi which provides for, among others, establishing a Preferential Trading
Arrangement between the two countries to promote harmonious development of the
economic relations and free movement of goods through reduction of tariffs
between the two countries.
2. The Agreement would remain in force till either party gives to the
other a notice for the Agreement’s termination. By this Agreement,
preferential tariff is granted by the Government of Afghanistan to 8 items
from India including tea, antisera and medicines, refined sugar, cement
clinkers and white cement. India has granted preferential tariff to 38
products from Afghanistan including raisins, dry fruit, fresh fruits and
spices.
3. Rules of Origin: The products to exported to each other have to
satisfy the Rules of Origin attached to the Agreement. As per the cumulative
rules of origin prescribed therein, in respect of a product which complies
with the origin requirements is exported by any Contracting Party and which
has used material, parts or products originating in the territory of the other
Contracting Party, the value addition in the territory of the exporting
Contracting shall be not less than 30 per cent of the f.o.b. value of the
product under export subject to the condition that the aggregate value
addition in the territories of the Contracting Parties is not less than 40 per
cent of the f.o.b. value of the product under export
***
India-MERCOSUR PTA
A Framework Agreement was signed
between India and MERCOSUR on 17th June 2003 at Asunction, Paraguay. The aim of this
Framework Agreement is to create conditions and mechanisms for negotiations in
the first stage, by granting reciprocal tariff preferences and in the second
stage, to negotiate a free trade area between the two parties in conformity
with the rules of the World Trade Organization.
2. As a follow up to the Framework
Agreement, a Preferential Trade Agreement (PTA) was signed in New Delhi on
January 25, 2004. The aim of this Preferential Trade Agreement is to expand
and strengthen the existing relations between MERCOSUR and India and promote
the expansion of trade by granting reciprocal fixed tariff preferences with
the ultimate objective of creating a free trade area between the parties.
3. The India-MERCOSUR PTA provides for
five Annexes. These five annexes have been signed between the two sides on
March 19, 2005, upon the conclusion of G-20 Meeting in New Delhi. The five
Annexes are: Offer List of MERCOSUR, Offer List of India, Rules of Origin,
Safeguard Measures and Dispute Settlement Procedure.
4. Under this PTA India and MERCOSUR
have agreed to give tariff concession to the other side on 450 and 452 tariff
lines respectively.
5. The PTA would be operational after
its ratification by the legislatures of the MERCOSUR countries.
6. Through IBSA Declaration made by
the Heads of India, Brazil and South Africa on 13th September 2006,
it was agreed that India-MERCOSUR PTA would be expanded by increasing the
number of products covered and increasing the tariff concessions agreed by
each side. Accordingly, a preliminary discussion to work out the modalities
of the future negotiations was held in New Delhi on 15 and 16 November 2006
wherein India presented a wish list of 626 additional products. In December
2006, MERCOSUR also presented its wish list of 2099 products which is being
considered in consultation with all concerned stakeholders.
***
Joint Study Group between
India and Russia
A Memorandum of Understanding (MOU)
on Cooperation between the Ministry of Commerce & Industry of the Republic of
India and the Ministry of
Economic Development & Trade of Russian Federation was signed during the visit
of Mr. G.O. Gref, Minister of Economic Development & Trade of Russian
Federation to India on 6.2.2006. The MoU provides for setting up of JSG
between India-Russia. The objectives of the JSG are as under:-
(i)
Formulate a program by the end
of 12006 to suggest steps for enhancing bilateral trade between India and
Russia to a level of US$10 billion by 2010; and
(ii)
Study the feasibility to
consider the possibility of signing Comprehensive Economic Cooperation
Agreement between India and the Government of the Russian Federation.
2. Three meetings of the JSG have
been held so far. The report of the JSG would analyze the prospects for
Trade in Goods, Services and Investment Cooperation between India and Russia.
Efforts are underway to finalize the report of the JSG.
***
Latest Status of Negotiations
between India and Korea
H.E. Mr. Manmohan Singh, Prime Minister of the Republic of India
and H.E. Mr. Roh Moo-hyun, President of the Republic of Korea met in New Delhi
on 6 October 2004 and agreed to establish a Joint Study Group to take a
comprehensive view of bilateral economic linkages between Korea and India,
covering, among others, trade in goods and services, investment flows, and
other areas of economic cooperation. In particular, the Joint Study Group was
mandated with the task of, inter alia, examining the feasibility of a
comprehensive economic partnership agreement (CEPA) between the two countries.
2. The Joint Study Group, composed of
government officials, economists and representatives of business communities
of Korea and India, held its first meeting in January 2005 and has met
alternately in India and Korea for a total of four times. As a result of its
study, the Joint Study Group concurred that there remains huge potential in
all areas to be exploited to develop the existing bilateral economic relations
into a more comprehensive and future-oriented one. In this regard, the Joint
Study Group concluded that a CEPA between Korea and India would serve as a
plausible institutional framework to this end and provide significant benefits
for both countries.
3. In the light of the above
consideration and the principles as set out in the relevant chapters of the
Report and also taking into account the long-term economic relationship to be
developed between the two countries, the Joint Study Group recommended that
the Korea-India CEPA cover, among other things:
·
Trade in goods;
·
Trade in services;
·
Measures for trade
facilitations;
·
Promotion, facilitation and
liberalization of investment flows;
·
Measures for promoting
bilateral economic cooperation in identified sectors; and
·
Other areas to be explored
for furthering bilateral partnership.
4. The Joint Study Group also
recommended that a Joint Task Force composed of government officials of both
countries be appointed to accelerate the process of realizing the benefits
that may be derived from the CEPA and start its work of developing a CEPA for
completion within a reasonable period of time. The Joint Task Force would
bring about specific recommendations on each of the constituent elements of
the CEPA for adoption by the two Governments.
5. The report of the JSG was signed by
the Co-chairs in Seoul on January 6, 2006.
6. In pursuance to the recommendation
of the JSG, a Joint Task Force composed of Government officials has been
constituted. The first meeting of India-Korea JTF was held on 23rd
and 24th March, 2006. The second and fourth meetings were held in
Seoul in the month of May and October 2006. The third and fifth meeting were
held in New Delhi and Jaipur respectively in the month of July 2006 and
January 10-12, 2007.
***
Latest Status of Negotiation between India and Japan
Prime Minister of India and Japan on 29th
November, 2004 on the sidelines of India-ASEAN Summit in Vientiane, agreed to
constitute a Joint Study Group (JSG), focusing on measures required for a
comprehensive expansion of trade in goods, trade in services, investment flows
and other areas of economic relations between the two countries. Accordingly,
India-Japan Joint Study Group was set with Secretary, Department of Economic
Affairs as the leader of Indian side. The fourth and final meeting of the JSG
was held during June 5-7, 2006 in Tokyo. The report of the JSG was submitted
to both the Prime Ministers in St. Petersburg on July 17, 2006.
2. The two leaders welcomed the report
of the JSG, which has made a series of recommendations, covering trade in
goods, trade in services, investment flows, role of Japanese ODA in promoting
economic partnership and other areas of economic cooperation. They noted that
the JSG has also recommended that India and Japan launch inter-governmental
negotiations to develop an Economic Partnership Agreement (EPA) or
Comprehensive Economic Partnership Agreement (CEPA), within a reasonable
period of time. The two leaders directed their officials to examine the
recommendations of the JSG in a comprehensive, constructive and positive
manner and expeditiously work out implementation modalities, including on
launching of negotiations on the proposed EPA/CEPA.
3. As per
the Joint Statement issued during the Prime Minister’s visit to Japan the two
leaders welcomed the report of the India-Japan Joint Study Group and directed
that those recommendations be implemented expeditiously. Convinced that
comprehensive economic engagement between the two countries must be a core
element of their strategic partnership and also recognising that closer
economic integration between India and Japan will contribute to further growth
and stability in the broader Asian region, the two Prime Ministers decided to
launch immediate negotiations for the conclusion of a bilateral Economic
Partnership Agreement/ Comprehensive Economic Partnership Agreement (EPA/CEPA),
on the basis of the recommendations submitted by the Joint Study Group. They
noted with satisfaction that a Joint Ministerial Statement, constituting a
Joint Task Force to undertake the inter-governmental negotiations on the EPA/CEPA,
has been signed during the visit. It will be the endeavour of the Joint Task
Force to expedite these negotiations aiming to complete them in substance as
soon as possible in approximately two years.
4.
The first round of negotiations on the
India - Japan
(Comprehensive) Economic Partnership Agreement were held from January 31 to
February 2, 2007 in New Delhi. The Japanese delegation was led by Mr.
Masaharu Kohno, Deputy Minister for Foreign Affairs and the Indian delegation
was led by Shri G.K. Pillai, Secretary, Ministry of Commerce. The working
level meetings were Co-Chaired by Mr. Sumio Kusaka, Deputy Director-General,
Ministry of Foreign Affairs from the Japanees side and Shri Dinesh Sharma,
Joint Secretary, Department of Commerce from the Indian side. At the first
round of negotiations, the terms of reference for negotiations were agreed
upon. Constitution of working / experts groups were also discussed.
Preliminary discussion also took place in the four working groups namely,
Trade in Goods, Trade in Services, Investment and Bi-lateral Co-operations.
The second round of negotiations will be held in April 2007 in Tokyo.
***
Latest Status of
India-China RTA Negotiations
A Joint Study Group was constituted following Prime Minister’s
visit to Beijing in June 2003. The relevant declaration in this regard is
reproduced below:-
“The two sides will set up a compact Joint Study Group (JSG) composed of
officials and economists to examine the potential complementarities between
the two countries in expanded trade and economic cooperation. The JSG would
also draw up a programme for the development of India-China trade and economic
cooperation for the next five years, aimed at encouraging greater cooperation
between the business communities of both sides. The Group should present a
study report and recommendation to the two Governments on measures for
comprehensive trade and economic cooperation by the end of June 2004.”
2. In pursuance to the above declaration, a Joint Study Group was
constituted. MEA was the nodal Ministry for the JSG. The final Report of
the India-China JSG was signed on 23rd March, 2005. The JSG in its
Report has recommended that the two governments appoint a Joint Task Force to
study in detail the feasibility of, and the benefits that may derive from the
possible China-India Regional Trading Arrangement and also give its
recommendations regarding its content. As per the recommendations of the JSG,
a Joint Task Force has already been set up.
3. The first meeting of the India-China JTF was held on 13.3.2006 in
New Delhi. In this meeting, the Terms of Reference and Methodology for the
work of India-China JTF were finalized. The second meeting of India-China JTF
was held on 18th and 19th September, 2006 in Beijing.
Shri Dinesh Sharma, Joint Secretary led the Indian delegation. The third
meeting of India-China JTF was held on 4th and 5th
January, 2007 in New Delhi.
***
Framework Agreement on
Comprehensive Economic Co-operation between the Association of South East
Asian Nations (ASEAN) and India.
India’s engagement with the Association of
South East Asian Nations (ASEAN) started with its "Look East Policy" in the
year 1991. ASEAN has a membership of 10 countries namely Brunei Darussalam,
Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore,
Thailand and Vietnam. India became a Sectoral Dialogue Partner of ASEAN in
1992 and Full Dialogue Partner in 1996. In November 2001, the ASEAN-India
relationship was upgraded to the summit level.
2. The 1st ASEAN Economic Ministers (AEM)
– India Consultations were held on 15th September 2002 in Brunei Darussalam
where the Ministers, after discussing the Joint Study Report decided to
establish an ASEAN-India Economic Linkages Task Force (AIELTF). The AIELTF was
asked to prepare a draft Framework Agreement to enhance the ASEAN-India trade
and economic cooperation before the 2nd AEM – India Consultations.
Subsequently, at the First ASEAN-India Summit held on 5 November 2002 in Phnom
Penh, Cambodia, the erstwhile Prime Minister of India made the following major
announcements:-
i.
India will extend special & differential trade treatment to ASEAN
countries, based on their levels of development to improve their market access
to India;
ii.
FTA within 10 years timeframe;
3. A Framework Agreement on
Comprehensive Economic Cooperation between the Association of South East Asian
Nations (ASEAN) and India was signed by the Prime Minster of India and the
Heads of Nation/Governments of ASEAN members during the Second ASEAN – India
Summit on 8th October 2003 in Bali, Indonesia.
4. The key elements of the Framework
Agreement on Comprehensive Economic Cooperation between the Association of
South East Asian Nations (ASEAN) and India cover FTA in Goods, Services and
Investment, as well as Areas of Economic Cooperation. The Agreement also
provided for an Early Harvest Programme (EHP) which covers areas of Economic
Cooperation and a common list of items for exchange of tariff concessions as a
confidence building measure.
Current
Status
5. The ASEAN-India Trade Negotiating
Committee (TNC) was constituted and 14 meetings have been held so far. The
ASEAN-India TNC is undertaking negotiations for a Comprehensive Economic
Cooperation Agreement (CECA) which includes a Free Trade Area in goods,
services and investment. Due to difference of opinion on Rules of Origin, the
EHP, agreed under the Framework Agreement, on Goods could not be implemented.
The new time frame for FTA in Goods has been agreed. The ASEAN-India
FTA(AI-FTA) negotiations are targeted to be concluded by July, 2007.
Agreement has been reached on the Rules of Origin. The TNC is now negotiating
the Sensitive Lists, modalities for tariff reduction and elimination, Dispute
Settlement Mechanism, etc. Both sides have reached an agreement recently on
the size of Negative List to be maintained by both sides, which will be 490
products with a trade value cap of 5%.
Negotiations in Trade in Services
and Investment are expected to begin immediately after the Agreement on Trade
in Goods is concluded.
***
India-Singapore Comprehensive Economic Cooperation Agreement
(CECA)
During the visit of Prime Minister to
Singapore in April 2002 to India, a Joint Study Group (JSG) for establishing a
Comprehensive Economic Cooperation Agreement (CECA) between the two countries
was set up on 8th April 2002. The JSG submitted its report to the two Prime
Ministers on 8th April 2003.
2. The JSG identified areas of
increased economic engagement between the two countries and also recommended
measures to be taken. The JSG recommended the early launching of negotiations
for a CECA to be structured as an integrated package of agreement between
India and Singapore including :-
a) A Free Trade Agreement, which
would include, inter-alia, trade in goods and services and investment.
b) A bilateral agreement on
investment promotion, protection and cooperation;
c) An improved Double Taxation
Avoidance Agreement;
d) A more liberal Air Services
Agreement and Open Skies for Charter Flights; and
e) A work programme of cooperation
in a number of areas including health care, education, media, tourism and the
creation.
3. ‘Declaration of Intent’ was
signed between the two countries on 8th April 2003. Negotiations on CECA were
launched in New Delhi on 27-28 May 2003. Commerce Secretary headed the team of
Indian negotiators while Singapore was led by their Permanent Secretary,
Ministry of Trade & Industry, Singapore. Twelve Rounds of negotiations were
held alternatively in India and Singapore.
The Comprehensive Economic Cooperation
Agreement (CECA) between India and Singapore was signed on 29th June, 2005 by
the Prime Minister Mr. Manmohan Singh and H.E. Mr. Lee Hsien Loong, Prime
Minister of Singapore. The CECA has become operational with effect from
1-8-2005.
The implementation of CECA was reviewed
recently at the level of Secretaries.
***
Framework Agreement for
establishing Free Trade between India and Thailand
In November 2001, the Prime Minister of
Thailand, Dr. Thaksin Shinawatra and the Prime Minister of India agreed to set
up a Joint Working Group (JWG) to undertake feasibility study on a Free Trade
Agreement between India and Thailand . The Joint Working Group observed that
the present policy regimes in both the countries were conducive to more
intensive bilateral economic integration and a Free Trade Agreement could
prove to be a building block for other sub-regional, regional and global
economic integration processes of which both countries are a part. Having
observed rich potential of trade expansion, the study concluded that the
proposed Free Trade Agreement between India and Thailand is feasible,
desirable and mutually beneficial. Accordingly, a Joint Negotiating Group was
set up to draft the Framework Agreement on India – Thailand FTA.
2. During the visit of Indian Prime
Minister to Thailand, a Framework Agreement for establishing Free Trade
between India and Thailand was signed by the Commerce Ministers of the two
sides on 9th October, 2003 in Bangkok, Thailand. The Framework Agreement
cover FTA in Goods, Services and Investment and Areas of Economic
Cooperation. The Framework Agreement also provided for an Early Harvest
Scheme (EHS) under which 82 common items of export interest to the sides have
been agreed for elimination of tariff on a fast track basis.
Current
Status
3. The tariff concessions on 82
items of EHS list began from 1.9.2004. The tariffs on these items would
become zero for both sides on 1.9.2006.
4. India-Thailand Trade Negotiating
Committee (TNC) has been constituted and discussions are being held on the
text of FTA, Rules of Origin, Dispute Settlement Mechanism and Sensitive
List. 10 Rounds of negotiations for FTA in Goods have so far been held.
The Framework Agreement prescribed that the FTA in Goods would commence from
March 2005. However, due to difference of opinion on certain issues, this
deadline could not be met. Negotiations for FTA in Services and Investment
have also begun. Last meeting of the India-Thailand Trade Negotiating
Committee (TNC) was held in Chiang Mai from 9-13 January 2006.
5. No TNC could be convened in second half of
2006 due to political uncertainty in Thailand. The next round of TNC is
expected to be convened shortly to resolve the outstanding issues.
***
Joint Study Group (JSG) to
Explore the Feasibility of Comprehensive Economic Cooperation Agreement
(CECA) between India and Malaysia
On 20th December 2004, the Hon’ble Dato’ Seri Abdullah H.A. Badawi, Prime
Minister of Malaysia and the Honourable Dr. Manmohan Singh, Prime Minister of
India agreed to the setting up of a Joint Study Group (JSG) to explore the
feasibility of Comprehensive Economic Cooperation Agreement (CECA) between the
two countries. In accordance with the mandate granted by the two Prime
Ministers, the Joint Study Group was duly constituted in March 2005.
2. The JSG met four times and had
several inter-sessional exchanges of drafts. Draft JSG Report has been
finalized and exchanged with the Malaysian side for updation of data, etc.
from their side.. After finalizing the report, it would be submitted to the
two Governments.
***
Setting Up of a Joint Study Group (JSG) to Explore the Feasibility of
Comprehensive Economic
Cooperation Agreement (CECA) between
India and Indonesia
During the visit of H.E. Dr Mari Elka
Pangestu, Minister of Trade, Indonesia to India from 7-9 August 2005, a
bilateral meeting between Commerce & Industry Minister and Minister of Trade,
Indonesia was held in New Delhi on 8th August 2005. During the meeting it was
agreed that even while focussing on strengthening India’s ongoing engagement
with ASEAN, the two countries could also examine the possibility of entering
into a bilateral comprehensive economic cooperation arrangement in the long
term.
During the visit of the Indonesian President
to India on 23.11.2005, an Memorandum of Understanding (MoU) on setting up of
a Joint Study Group (JSG) on CECA comprising of senior government officials of
the two sides, has been signed. The JSG is being constituted shortly. The
composition of the Indian delegation has been finalized.
***
“Free Trade Agreement (FTA)
between India and Gulf Cooperation Council(GCC)
The Gulf Co-operation Council (GCC)
is a customs union comprising of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia
and United Arab emirates. They are India’s third largest trading partners,
with exports to this region constituting about 3-4% of India’s global exports
and our imports from this region accounting for over 20% of India’s global
imports.
India is in the process of
negotiating a Free Trade Agreement with GCC and the first round of negotiation
was held on March 21-22, 2006. Trade in Services and Investment Cooperation
as well as General Economic Cooperation are proposed to be synergized with the
FTA. “
***
Israel-India Joint Study
Group and Implementation of its recommendations in the Report
A Joint Study Group Report (JSG)
had been constituted to examine ways and means of promoting bilateral economic
relations and to consider an Economic Partnership Agreement between India and
Israel. The Inter-Ministerial JSG finalized and released its report at Tel
Aviv, Israel on 10th November, 2005 recommending an India-Israel Action Plan
for Comprehensive Economic Cooperation between the two countries. This Action
Plan includes recommendation for a WTO compatible Preferential Trade Agreement
(PTA).
Both sides agreed to establish a Joint
Working Group (JWG) to expeditiously follow-up the implementation of
recommendations viz. PTA, Customs Cooperation, MRAs for items of both side’s
export interest, early utilization of R&D funds, establishment investment
dialogue, liberalization of trade in services, Joint Websites, negotiations on
bilateral shipping agreement etc. The Terms of Reference (TOR) for the
India-Israel Joint Working Group on Trade-in-Service are being finalized. The
text of the PTA, including Rules of Origin, Operational Certification
Procedures and Preferential Safeguards Measures have been proposed to the
Israel side by Embassy of India, Tel Aviv.
Negotiation process for India-Israel
Preferential Trade Agreement has commenced.”
***
Preferential Trade Agreement/
Comprehensive Economic Cooperation and Partnership Agreement
(CECPA) between India with Mauritius.
A Joint Study Group (JSG) constituted in November 2003 to study the
modalities of the CECPA discussed in detail the complementariness and
potential synergies between the two economies and, in its report of November,
2004, identified Investment, Trade in Goods and Services and General Economic
Cooperation for developing modalities of CECPA.
2. During his visit to Mauritius from
March 30-April 2, 2005, the Hon’ble Prime Minister of India conveyed India’s
acceptance of the report by the Joint Study Group on Comprehensive Economic
Cooperation and Partnership Agreement and both sides agreed to set up a
high-powered negotiating team for processing and finalizing the
recommendations of this report within a twelve-month period. Accordingly an
empowered team was constituted for negotiating a Comprehensive Economic
Cooperation and Partnership Agreement (CECPA) with Mauritius. The
Preferential Trade Agreement (PTA)/Comprehensive Economic Cooperation &
Partnership Agreement (CECPA) being negotiated with
Mauritius is likely to be finalized shortly.”
***
Framework Agreement with
South Africa Customs Union (SACU)
South Africa, Lesotho, Swaziland, Botswana and Namibia have formed the South
Africa Customs Union (SACU) with a common Custom Tariff Policy. A Joint
Working Group (JWG) consisting of Government representatives from both sides
was set up to examine the proposal to prepare a draft Frame Work Treaty for
the Preferential Trade Agreement (PTA) between India and SACU countries. In
a meeting of JWG held in Namibia on 6-7th September 2004, the draft
Framework Agreement was finalized.
2. A Cabinet decision has been taken
to enter into a Framework Agreement with the South African Customs Union (SACU).
The Agreement will aim to promote expansion of trade and provide a mechanism
to negotiate and conclude a comprehensive Free Trade Agreement within a
reasonable time.”
***
The Bangkok Agreement renamed
as Asia Pacific Trade Agreement (APTA) was signed in the first session of the
Ministerial Council on 2nd November, 2005 in Beijing, China. The original Agreement
was signed on 31 July 1975 as an initiative under the Economic and Social
Commission for Asia and Pacific (ESCAP) for trade expansion through exchange
of tariff concessions among developing countries of the ESCAP region. The
Agreement is operational among five countries namely, Bangladesh, China PR,
India, Republic of Korea and Sri Lanka. Till date
three Rounds of Trade Negotiations have taken place.
2. The Third Round of tariff
concessions were implemented from 1st September 2006 vide customs
notification No. 89/2006-CUSTOMS dated 1st September, 2006 which
has consolidated the concessions granted in all the three rounds of
negotiations. The revised Rules of Origin under APTA have been notified vide
Notification No.94/2006-CUSTOMS (N.T.) dated the 31st August, 2006.
3. The text of the Agreement,
Rules of Origin and other details of national lists of tariff concessions may
be seen under the heading of Trade Agreements/Transit Agreements (sub-heading
Asia Pacific Trade Agreement) of the website
www.commerce.nic.in.
***