India: Bilateral and Regional Trade Agreements: An update

Overview:

Somehow developing countries don't
seem to lose their enthusiasm for free trade. One would expect the
regular breakdowns at the World Trade Organisation's Doha talks to
trigger a rethink on the free trade paradigm. Quite the contrary;
they have (with the exception of a few countries in South America)
plunged headlong into a tangled spaghetti bowl of hundreds of
bilateral and regional trade agreements (with each other and
developed countries) based on the same flawed trade and investment
liberalisation agenda that they find deeply problematic at the WTO
platform. Such issues, that have consistently derailed the WTO talks,
include implications of deep tariff cuts in agriculture and
industrial products, strict rules on Intellectual Property and
deregulation and resultant loss of policy space over Investment,
Government Procurement and Competition Policy rules. Many of these
issues figure prominently in bilateral and regional trade deals. Not
surprisingly the United Nations Conference on Trade
and Development (UNCTAD) in its 2007 Trade and Development Report
released in September this year gave a grim warning on North-South
bilateral FTAs warning that they could reduce the scope for national
policies that support development and structural change in developing
countries. The report further goes on to say that today's
industrialised countries and emerging developing countries (India
being a case in point) have consistently protected their nascent
industries from international competition. It highlights that most of
the FTAs being negotiated require sharply reduced tariffs on
industrial goods, exposing domestic producers to overwhelming foreign
competition.

Overview:

India is a new comer to the FTA game.
Its first real FTA kicked in as late as 2000 with its neighbour Sri
Lanka. But with parleys very quiet on the multilateral front in
Geneva, India also seems to have given way to Plan B; the bilateral
and regional route to trade liberalisation. Over 25 such agreements
are either being implemented or at various stages of negotiation by
the Ministry of Commerce and Trade.

This update is an attempt at mapping
India's contribution to the various FTA spaghetti strings that are
criss-crossing Asia as well as other parts of the world. We have
listed all the agreements India is engaged in with a short note on
the state of play and provided more detail on six key FTAs. More
detailed papers on agreements such as SAFTA, the EU-India Trade and
Investment Agreement and ASEAN-India Regional Trade and Investment
Agreement will follow in the coming months.

Content:

1.Bilateral
and Regional Trade Agreements (Operational and under negotiation)

2.AGREEMENT
ON South Asian Free Trade Area (safta)

3.India-Sri
Lanka Free Trade Agreement

4.India-Thailand
Free Trade Agreement

5.India-Singapore
Comprehensive Economic Cooperation Agreement

6.
ASEAN-India Regional Trade and Investment Agreement

7.EU-India
Trade and Investment Agreement

8.
Abbreviations

9.
References

Bilateral and
Regional Trade Agreements (Operational and under negotiation)

1. A)
Operational Agreements

Agreement on South Asian Free
Trade Area (SAFTA).Operational since January 2006, see section
2;
Asia
Pacific Trade Agreement (APTA) or Bangkok
Agreement. Operational since September 2006;
Bangladesh- India
Amended Trade Agreement. Operational since April 2006;
Bhutan-India Agreement on Trade,
Commerce and Transit. Operational since January 1972
India-Maldives Trade Agreement.
Operational since April 1981;
India-Singapore Comprehensive
Economic Cooperation Agreement. Operational since August 2005, see
section 5;
India-Sri Lanka Free Trade
Agreement. Operational since March 2000, see section 3;
India-Thailand Free Trade
Agreement. Operational since September 2004, see section 4;
Indo-Nepal Treaty of Trade.
Operational since 1992.

Name of the Agreement	Member countries	Scope	State of Play
Asia Pacific Trade Agreement (APTA)	Bangladesh, China, India, Republic of Korea and Sri Lanka^¹	Trade in goods	Signed in July 1975 it was initially known as the Bangkok Agreement. It is an initiative under the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) for trade expansion through exchange of tariff concessions among developing country members of the region. In 2001, with China joining the initiative it became the APTA. A ministerial meeting held in November 2005 decided to deepen and widen the scope of the agreement. The UNESCAP office is a key mover behind the agreement and also functions as the Secretariat^². The latest Ministerial Meeting in October 2007 in Goa decided to further deepen tariff cuts and expand the scope of the agreement to non-tariff issues, services and investment.
Bhutan-India Agreement on Trade Commerce and Transit	India, Bhutan	Trade in goods	The agreement entered into force in July 2006. It is the revised version of the Indo-Bhutan Trade Treaty signed in Thimphu in January 1972. In the revised agreement eight exit/entry points have been added to the existing twelve points with certain modifications to simplify the export/import procedure. There are no modalities as yet for implementation of a free trade regime.
India-Maldives Trade Agreement	India, Maldives	Trade in goods	The agreement was signed in April 1981 in Male by the Indian Minister of State of the Ministry of Commerce, Khursheed Alam Khan and the Maldives Minister of Fisheries, Abdul Sattar. under this agreement both countries agreed on broad trade principles.
Indo-Nepal Treaty of Trade	India, Nepal	Trade in goods	The 1992 agreement was to expire in March 2007 but after talks it has been extended upto March 2012. Under the Agreement Nepal's manufactured goods, barring 3 items in the negative list and 5 items with quantitative restrictions, will have duty-free access without reciprocity. Agricultural products are traded both ways without tariffs. India continues to push for inclusion of infrastructure (especially hydropower) and simplification of customs check offices. The Nepal business community is concerned about non-tariff barriers, trade facilitation measures, dispute settlement mechanism as well as unpredictable rises in tariffs and wanted India to address those in the treaty itself^³. These issues were not addressed adequately during a meeting in February 2007 and were hence not included in the new agreement.

Source:

Department
of commerce, Government of India site, Trade Agreements:

http://commerce.nic.in/trade/international_ta.asp?id=2&trade=i

1. B)
Agreements under negotiation

Association of East-Asian Nations
(ASEAN)-India Regional Trade and Investment Area;
Afghanistan-India Preferential
Trade Agreement;
Bay of Bengal Initiative for
Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) Free
Trade Area;
Chile-India Preferential Trade
Agreement;
China-India Regional Trading
Arrangement;
Egypt-India Free
Trade Agreement;
European Free Trade Area
(EFTA)-India Economic Partnership Agreement;
European Union (EU)-India Trade
and Investment Agreement;
Gulf Cooperation Council
(GCC)-India Free Trade Agreement;
India-Indonesia Comprehensive
Economic Cooperation Arrangement;
India-Japan (Comprehensive)
Economic Partnership Agreement;
India-Malaysia Comprehensive
Economic Cooperation Agreement
India-Mauritius Comprehensive
Economic Cooperation and Partnership Agreement;
India-Mercado
del Sur (MERCOSUR) Preferential Trade Agreement;
India-MERCOSUR-SACU Trilateral
Free Trade Agreement (T-FTA);
India-Russia Comprehensive
Economic Cooperation Agreement;
India-South Korea Comprehensive
Economic Partnership Agreement;
India-Southern African Customs
Union (SACU) Comprehensive Free Trade Agreement.

Name of the Agreement	Countries involved	Issues Involved	Current Status
1. Association of East-Asian Nations (ASEAN)-India Regional Trade and Investment Area	See part 6
2. Afghanistan-India Preferential Trade Agreement	India, Afghanistan	Trade in goods	Framework Agreement^⁴ (FA) signed in March 2003 in New Delhi. By the agreement Afghanistan grants preferential tariffs 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. Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) Free Trade Area	Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka, and Thailand	Trade in goods, services, and investment	A FA was signed in February 2004 for a BIMSTEC Free Trade Area (FTA). A Trade Negotiating Committee (TNC) has been constituted to carry the negotiations forward. Talks are stuck mainly due to disagreement over Rules of Origin (RoO), which India wants less liberal than other BIMSTEC members. There are disagreements over the positive list^⁵, which India wants short, as well as on the items to be on the negative list. Finally, removal of non-tariff barriers is also an issue^⁶. The negotiations are on, but no final agreement has been signed as yet.
4. Chile-India Preferential Trade Agreement	India, Chile	Trade in goods, services, investments, and economic cooperation in areas of mutual interest	In January 2005, a FA was signed and a Joint Study Group (JSG) was set up to draw the modalities of the agreement. In March 2006 a Preferential Trade Agreement (PTA), applicable for 300 products in each country, was signed. Chile mainly exports copper to India and Indian exports interests to Chile are mainly automobiles and tea. Near shoring^⁷ is another interest for India in Chile^⁸. Discussions on the modalities of a FTA in the frame of a JSG started in November 2005. The JSG draft report was discussed in March 2006, but no agreement has been signed as yet.
5. China-India Regional Trading Arrangement	India, China	Trade in goods, services and investments	A JSG was constituted following Prime Minister's AB Vajpayee's visit to Beijing in June 2003 and the JSG report was signed in March 2005.A task force comprising officials from both countries recently submitted its report in October 2007 saying the FTA was feasible. This report is not yet public but industry lobby groups such as FICCI (Federation of Indian Chambers of Commerce and Industry) have voiced their opposition to an FTA stating that tariff reductions will harm Indian industry^⁹. Media reports indicate that the announcement of the FTA could be made when Prime Minister Manmohan Singh visits China in January 2008.
6. Egypt-India Free Trade Agreement	India, Egypt	Trade in goods	In April 2001 negotiations for a PTA were launched. In January 2002, a Joint Working Group (JWG) was created to supervise the negotiations. In 2002, an agreement with a limited scope (PTA) was signed. In 2003, both countries exchanged their lists of products to be granted preferential treatment under the agreement. No progress has been achieved since.
7. European Free Trade Area (EFTA)-India Economic Partnership Agreement	India, Iceland, Liechtenstein, Norway, and Switzerland	Trade in goods, services, investment and intellectual property rights.	A JSG was established in December 2006 to draw the modalities of the agreement. The JSG report is expected by November 2007. EFTA Secretary General Kåre Bryn declared to Swiss Info, in May 2007 that he is ‘optimistic that the negotiations will start by the end of the year^¹⁰.
8. European Union (EU)-India Trade and Investment Agreement	See part 7
9. Gulf Cooperation Council (GCC)-India Free Trade Agreement	India, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates	Trade in services, investment, and economic cooperation in areas of mutual interest	FA signed in August 2004 provided the frame for FTA negotiations. The first round of negotiations was held in March 2006. Some tensions rose around the inclusion/ exclusion of crude oil in the FTA. Opposition has come from the Indian Revenue Department because of high revenue loss to the Government on account of custom duty exemption. GCC countries want crude oil to be in, as it accounts for 73% of Indian 60 billion UD$ imports of crude oil^¹¹. Reports indicate that a formal agreement would be signed by September 2008^¹².
10. India-Indonesia Comprehensive Economic Cooperation Arrangement	India, Indonesia	Not defined as yet	In November 2005, a JSG was created to draw the modalities of a bilateral agreement. No significant progress has been made since then.
11. India-Japan (Comprehensive) Economic Partnership Agreement	India, Japan	Trade in goods, trade in services, and investment	Beginning of 2006, a JSG was set up, which in turn created a JWG to supervise the negotiations for a FTA. In February 2007, both countries launched negotiations and aim to seal the agreement within two years. Japan is seeking cuts to India's 100 percent tariffs on vehicle imports and the creation of common rules on investment and services. India is pressing for deregulation of Japanese customs inspections, cuts on tariffs on shrimp and a relaxation of visa rules for Indian medical care workers and engineers^¹³. There are tensions related to RoO, as India wants products to get concession to fulfil two simultaneous conditions; 40% value addition as well as a change in the tariff line at 4-digits level – which is opposed by Japan^¹⁴.
12. India-Malaysia Comprehensive Economic Cooperation Agreement	India, Malaysia	Trade in goods, services, investments, and economic cooperation in areas of mutual interest	A JSG was constituted beginning 2005 to study the modalities of the agreement. The JSG met four times till May 2006. No finalised report has been presented as yet.
13. India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement	India, Mauritius	Trade in goods, services, investment and economic cooperation in areas of mutual interest	A JSG was constituted in November 2003 and its report presented in November 2004. In April 2005, both sides agreed to set up a High-powered negotiating team for processing and finalizing the negotiations for a bilateral agreement within a twelve-month period (i.e. April 2006). As of May 2006, the empowered team held five rounds of talks. No final report has been presented as yet.
14. India-Mercado del Sur (MERCOSUR) Preferential Trade Agreement	India, Brazil, Argentina, Uruguay, Venezuela, and Paraguay	Trade in goods	FA signed in June 2003, which provides for a double stage trade agreement: a PTA in the first and an FTA in the second stage. The PTA was signed in New Delhi in January 2004 and in March 2005 annexes were signed (identifying products that were to have reduced tariffs in bilateral trade) and RoO and dispute settlement mechanisms were decided. The PTA will come into force as soon as it is ratified by the legislatures of Brazil and Argentina, which are yet to do so. FTA negotiations are yet to begin.
15. India-MERCOSUR-SACU Trilateral Free Trade Agreement (T-FTA)	India, MERCOSUR, SACU (namely, Botswana, Lesotho, Namibia, South Africa, and Swaziland)	Trade in goods, services and investment	India, Brazil, South Africa Trilateral Cooperation Forum (IBSA) was set up in 2003 at the United Nations General Assembly Forum. During the first IBSA Summit in Brasilia in September 2006, the T-FTA was proposed. The establishment of the working group to focus on the modalities of the agreement was also announced. Last IBSA Summit was held in South Africa in October 2007 and a trilateral meeting is slated to be held in 2008, but no modalities have been agreed as yet.
16. India-Russia Comprehensive Economic Cooperation Agreement	India, Russia	Trade in goods, services and investment	In February 2006, a JSG was set up and, In July 2007, its report was finalised. The report has now to be approved by both Governments. A JTF is to be set up by the end of 2007 to supervise the negotiations for a trade agreement^¹⁵.
17. India-South Korea Comprehensive Economic Partnership Agreement	India, Korea	Trade in goods, services, investment and economic cooperation in areas of mutual interest	JSG established in October 2004 and report finalised in January 2006. This lead to the creation of a JTF and the launch of negotiations. News reports say that modalities on goods have been finalised, while there is no understanding on the service sector, which is a market of high interest for India^¹⁶. Both countries have agreed on the size of the negative list in goods (5% and 15% of the total trade lines for South Korea and India respectively) and products to be part of the list are yet to be negotiated. Negotiations are expected to be concluded by December 2007^¹⁷.
18. India- Southern African Customs Union (SACU) Comprehensive Free Trade Agreement	India, South Africa, Botswana, Lesotho, Namibia, and Swaziland	Trade in goods	In December 2002, a JWG was set up and, in September 2004 it proposed a PTA. In December 2005, both sides agreed on a comprehensive FTA^¹⁸. News reports say that revenue loss from the implementation of an FTA is a sensitive issue for South Africa, which ‘probably explains the lethargy shown by SACU authorities'^¹⁹. Negotiations for the FTA were been launched in Pretoria in October 2007.

Source:

Asia
Regional Integration Centre site, Free Trade Agreement Database for
Asia, FTA by Country / All, India:
http://aric.adb.org/FTAbyCountryAll.php

Federation
of Indian Chambers of Commerce and Industry site, International,
Country reports:
http://www.ficci.com/international/non-jbc-countries.htm

Department
of commerce, Government of India site, Trade Agreements, RTA India is
currently part of:
http://commerce.nic.in/trade/international_ta_current.asp

AGREEMENT ON South
Asian Free Trade Area (safta)

The South Asian Association for
Regional Cooperation (SAARC) with a population of 1.5 billion is the
largest regional grouping in the world. Its economic arm, the
Agreement on South Asian Free Trade Area (SAFTA), an attempt at trade
and investment liberalisation across the region, was signed in
January 2004 and has eight members: Bangladesh, Bhutan, India,
Maldives, Nepal, Pakistan, Sri Lanka and Afghanistan. Presently
intra-regional trade constitutes only five percent of the regions
total international trade.

SAFTA came into force in
early 2006 and its current mandate pertains to removing barriers in
agriculture and manufacturing goods trade between member countries.
The agreement provides for progressive tariff reductions on products
for a period of 10 years with exceptions, which are found in the
sensitive list. The liberalisation program for tariff reductions
includes some 5,500 tariff lines (both agriculture and industrial
products). Negotiations on the sensitive list continue with Pakistan
having 1183 products, Sri Lanka 867 products, Bangladesh 1254 and
India 867 products^²⁰.
Some countries such as India and Bangladesh also have another set of
sensitive lists for Least Developed Countries^²¹
(LDCs) in the grouping.

Several countries of the
region identify Non Tariff Barriers (NTBs) such as packaging and
labelling requirements, testing, quarantine and other certifications
as being the main technical issues blocking the effective
implementation of SAFTA. Trading partners name India as a culpable
party, mentioning that tariff reductions notwithstanding access to
the Indian market is highly restricted because of India's numerous
domestic regulations. As yet India has not notified its list of NTBs.

India is a key player in SAFTA; it is
the most developed among SAARC countries in terms of its import and
export baskets, which are highly diversified compared to smaller
partners in the region and its scale of production is relatively
quite high. With its developed services sector it has been pushing
for the inclusion of services within the ambit of SAFTA but it is a
contentious issue among smaller countries such as Bangladesh. In
February 2007, industry representatives in Bangladesh had a strategy
meeting at their Ministry of Commerce and expressed their views
against the liberalisation of the country's incipient services
sector under SAFTA^²².
Despite this dissenting note, the declaration of the recent 14^th
SAARC Summit at New Delhi in April 2007 stated that SAFTA should
integrate trade in services. The summit called for the finalisation
of an agreement in the services sector at the earliest.

The SAARC membership
seems to be exercising great caution before implementing SAFTA
provisions fully, since political friction between main regional
actors India and Pakistan continues to question the viability of
SAFTA itself. Smaller members prefer to wait and watch to see full
commitments from India and Pakistan before they do their bit. Also
the uncertain political situation in Pakistan, Bangladesh and Sri
Lanka (all under varying stages of national emergencies in 2007) and
the democratic transition process in Nepal guarantees that SAFTA will
have to wait in line as domestic priorities rightly take precedence.

For the official site of SAFTA on the
SAARC secretariat site, see:

http://www.saarc-sec.org/main.php?t=2.1.6

For an assessment of the economic
relevance of ‘free trade' type of agreements in the South Asian
context, see:

THOMAS
K Joe, "A Sub continental free trade utopia", in Himal South
Asian, Delhi, January 2004.

For
more information on the present issues related to SAFTA
implementation from a business community point of view, see:

PEER
Mohammad, ‘SAFTA moot for
removing non-tariff barriers', The Business Recorder, Pakistan,
April 19, 2007.

India-Sri Lanka
Free Trade Agreement

The India- Sri Lanka Free Trade
Agreement (ISFTA) was signed in 1998 in New Delhi. It became
operational from 2000 and is a trade agreement in goods for the
establishment of a free trade area by end of 2008 through elimination
of tariffs in a phased manner. The first phase was an immediate
tariff concession on the items under the positive list of both
countries. The second phase mandated a phased concession on the
remaining exchanged items, excluding the items under the negative
list of both countries (Items under the negative list are not given
any concession).

Interestingly, India has been on the
receiving end on this FTA. With its signing, the duty free import of
black pepper from Sri Lanka increased from 1385.3 tonnes in April
1999-March 2000 to 4865.1 in April 2004-March 2005. The ISFTA was
also responsible, to some extent, for import surges in coconut oil
because import of coconut (crude and refined) oil and oil cake mainly
comes from Sri Lanka, Indonesia, Philippines and Malaysia. The import
of refined coconut oil in India increased from 3753.72 tonnes in
1999-2000 to 11427.14 in 2004-2005 while oil cake import increased
many fold during the same period from 72.84 tonnes to 50651.68
tonnes. In order to evade injury to Indian farmers due to the import
surge of pepper and vanaspati both sides agreed to cap exports of
vanaspati, black pepper, as well as coconut in December 2006.

The reason for capping trade in pepper
under the ISFTA was that the traders/ exporters were milking the
benefit of tariff concessions, at the cost of local farmers. Reports
from the Government of Kerala's WTO monitoring cell indicate that
in 2005-06 export of pepper from the State stood at 16700 tonnes and
import of pepper was 16870 tonnes. In 2004-05 exports of pepper was
14150 tonnes while imports of pepper was 17725 tonnes. And the tariff
free imported pepper was being re-exported from India with export
subsidies, thus the traders were making profit at both ends. Another
drawback of the ISFTA, which was noticed in the pepper case, was that
third countries were trying to smuggle their surplus through Sri
Lanka into India. According to reports, Sri Lanka produces around
7,000-8,000 tonnes of pepper. Allowing for Sri Lanka's domestic
consumption of 4,800 tonnes, this should still leave the country with
an exportable surplus between 2,200 and 3,200 tonnes only. The high
amount of pepper exports to India indicate that pepper from other
countries was routed through Sri Lanka^²³.

Negotiations to deepen the existing
agreement started in April 2003. A Comprehensive Economic Partnership
Agreement (CEPA) to include services (such as tourism, shipping,
logistics, professional and airline services) was to be implemented
by March 2004. But at that time, both Sri Lanka (in April 2004) and
India (May 2004) saw a change in Governments at the central level.
Both Governments wanted more time to study the agreement. Afterwards,
trade disputes around copper, pepper and vanaspati blocked the CEPA
negotiations in 2006 and completely stopped local exports of
vanaspati oil, until early 2007, when India agreed on concessions on
vanaspati. New negotiations include extending the scope of the
agreement to professional services (such as finance, health and
education) as well as investment measures. A meeting was held on
March 28 and 29 2007 where discussions included review of a double
taxation agreement, review of RoO and the negative list. Both sides
agreed on several cuts in the negative list. By then, both sides
expressed their interest to conclude the negotiation process by July
2007, but Sri Lanka services sector representatives have shown
concern (particularly in the sector of shipping, education,
construction and insurance)^²⁴.
CII (Confederation of Indian Industries) representative P K
Mohapatra, on his return from Colombo in early June 2007 stated that
an agreement ‘can become reality by March 2008^²⁵'.

For the full text of the agreement on
the Sri Lankan Commerce Ministry site, see:

http://www.doc.gov.lk/regionaltrade.php?mode=inop&link=isfta

For more information on the interest of
both sides regarding the inclusion of services in CEPA, see:

SAMARAWEERA
Dilshani. "India, Sri Lanka to
open up services markets this year", The Sunday Times, Sri Lanka,
April 8, 2007.

For
more general information on CEPA negotiations, see:

Anonymous,
"Indian trade delegation to visit Sri Lanka", The Economic Times,
India, March 23, 2007.^²⁶

For more information on the bilateral
meeting on March 28-29 2007, see:

REDDY
B. Muralidhar, "India to remove port curbs on Sri Lankan tea,
apparel", The Hindu, India, April 1, 2007.

India-Thailand Free
Trade Agreement

The FA for establishing an FTA between
India and Thailand was signed in October 2003, in Bangkok. The
agreement covers trade in goods, services and investment and provides
for the phased elimination of tariffs aiming for a complete FTA by
2010. The agreement became operational from September 2004 with the
implementation of the Early Harvest Scheme (EHS). Under the EHS 82
common items of export interest have been agreed for complete
elimination of tariff on a fast track basis and concessions were
completed by September 2006.

In India two main issues emerged after
the implementation of EHS: inverted duty issue and diversion issue
related to third country exports^²⁷.
Sources from industry groups in India mention that RoO
provided by India-Thailand agreement are not considered to be fully
foolproof in guarding Indian industries from this unfair competition.

According to the agreement,
negotiations for a second phase of concessions in goods to be carried
by the India-Thailand Trade Negotiating Committee (TNC) were to
commence from March 2005. There is also a provision for negotiations
on trade in services and investment. These negotiations did not begin
as scheduled. The issues to be addressed during the second phase
include the sensitive list as well as the RoO regime for goods
liberalisation. The last meeting of the TNC was held in Chiang Mai
from January 9-13 2006 and there has been little progress since then.
On the Thailand side, the political uncertainty following the coup by
the Thai Royal Army in September 2006 is one of the reasons why most
FTAs that Thailand is negotiating are on hold. Another reason could
be Thailand's active engagement in the FTA negotiations between
India and the ASEAN group of countries.

Thailand is keen to include more items
under the FTA; to get market access in agriculture and horticulture
products, processed and canned fruits and rubber, and is interested
in Indian exports in information technology, pharmaceuticals and
automobiles. In India the industrial sectors, particularly auto parts
are very critical of the adverse effects of the implementation of the
EHS. Additionally, Thailand wants to relax the RoO established under
the EHS. India does not agree and is worried about trade from third
countries that might enter India through the FTA with Thailand^²⁸.
Recently, Thailand dropped its demands on rubber concessions and
India has show interest in starting negotiations on Investment rules,
but negotiations have not concluded yet.

For the full text of the FA on the
Indian Ministry of commerce and Industry site, see:

http://commerce.nic.in/trade/international_ta_framework_thailand.asp

For an article on the negotiations
feedbacks, see:

BHUYAN
Rituparna, "India-Thailand FTA delayed", Business Standard,
India, June 19, 2007.

If this link doesn't work, please
click
here

For more information on the rubber
issue, see:

MUKHERJI
Biman, "Rubber planters wary of free-trade pact", Reuters, India,
April 17, 2007.

India-Singapore
Comprehensive Economic Cooperation Agreement

The Comprehensive Economic Cooperation
Agreement (CECA) between India and Singapore entered into force from
August 2005 and is presently India's most ambitious FTA. CECA
comprises a free trade agreement in goods and services, a bilateral
agreement on investment protection and promotion, and an improved
double taxation avoidance agreement, Mutual Recognition Agreements^²⁹
(MRA), and cooperation agreements in various sectors – customs,
science and technology, education, e-commerce, intellectual property
and media. In trade in goods, Singapore had few tariffs and
eliminated them at the entry into force of CECA. India's concession
to Singapore is based on three levels, with the exception of goods
kept on a negative list (to be completed by April 2009)^³⁰.
In trade in services, both countries have undertaken commitments to
specific sectors, which will enjoy special treatment – no
quantitative restrictions, no limitations on the number of service
suppliers or on the total value of service transaction. Singapore
will get preferential treatment in: business services, construction
and related engineering services, financial services,
telecommunication services, tourism and travel related services and
transport services. India will get preferential treatment in business
services, distribution services, education services, environmental
services and transportation services. Additional disciplines and
procedures related to financial services and telecommunication
services are also provided by CECA. On investment, national treatment
is accorded, which has important aspects like the free transfer of
income and payments to investors from both countries^³¹.
Concrete implementation of concessions in both services and
investment sectors are still under negotiation. MRA in architectural
services have already been finalised, while MRA in services for
accountants, doctors, dentist and nurses are under process.
Negotiations on MRA in goods for telecommunication equipments –
that eliminates the need for product testing and certification in
both countries – have concluded and negotiations are on in the
sectors of electronics and electronic equipment and egg products.

The CECA was reviewed at the end of
March 2007 and following the review, more goods from Singapore have
been granted concessions under the Supplementary Agreement. In the
service sector, the difficult issue of banking concessions, where
India tried for Qualified Full Banking status in Singapore for Indian
banks, was not addressed.Discussions on MRA in services to finalise
the access to Singapore by Indian professionals in mutually agreed
fields is still to be finalised.

For the text of the FA on the Indian
Ministry of Commerce and Industry site, see:

http://commerce.nic.in/ceca/toc.htm

For an article on the present situation
in trade sector, see:

K.R.
Srivats, "Govt effects further import duty cuts with Singapore",
Business Line, India, April 6, 2007.

For an article on the present situation
in services sector, see:

KHANNA Vikram,
"India go-ahead for S'pore banks expected by July", The Business
Times, Singapore, March 26, 2007.

Anonymous,
"Banking issues to dominate India-Singapore CECA talks", The
Financial Express, India, March 15, 2007.

For an article on the investment
sector, see:

S
Arun, VENKATESH Mahua, "Singapore keen on investing in industrial
parks" Business Line, India, November 8, 2006.

ASEAN-India
Regional Trade and Investment Agreement

In October 2003, in Bali, India signed
a FA on Comprehensive Economic Cooperation with the member States of
the Association of South East Asian Nations (ASEAN), namely Brunei
Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar,
Philippines, Singapore, Thailand and Vietnam. The agreement aims an
ASEAN-India Regional Trade and Investment Area (RTIA) through free
trade agreements in goods, services and investment. The FA sets the
frame for the negotiations. In trade in goods, an Early Harvest
Scheme (EHS) was envisaged in the agreement but has been abandoned
due to differences between both sides on RoO. Negotiations on trade
in goods, to set up lists of products for tariff reduction and time
schedules, were planed to be concluded by June 2005 and
implementation was to start by January 2006, but negotiations are
still on. The agreement provides for liberalisation of trade in
services beyond the WTO's General Agreement on Trade in Services
(GATS). Negotiations on services and investment were to be concluded
by 2007 but haven't started yet.

Negotiations on trade have been very
difficult principally around agriculture products to be given
concessions, mainly on palm oil. Another difficult issue has been the
maximum ceiling of the list of products to be liberalised on the
sensitive list products that will not be given concessions till 2022
as different from the normal track to be given concessions by 2018.
Since India agreed to drop its position on palm oil beginning of
2007, negotiations have moved on. Both sides agreed in January 2007
in Cebu, Philippines, to conclude a FTA on goods by July 2007. The
objective was to clinch the proposed ASEAN-India FTA (AI-FTA) with
regard to goods, as different from services or investment. A meeting
was held in Jakarta in March 2007, where India decreased the amount
of items on its list from 1,414 to 854 and finally to 490. During the
same meeting India agreed to reconsider a tariff concession of 50% by
2018 – instead of 2022 – starting from the entry into force of the
agreement – instead of 2012 – to be given on palm oil as well as on
tea, coffee and pepper. Negotiations are still on, as ASEAN is still
not satisfied with Indian concessions and wants further concessions
to 30% on palm oil and 20% on tea, coffee and pepper, which is
unrealistic for the Government of India. Additionally, Brunei asked
for concessions on crude oil and natural gas. The mutually agreed
deadline of July 2007 seems now to have been too ambitious and the
earliest possible conclusion of the talks appears to be the next
ASEAN+1 Summit in November 2007^³².

For the full text of the FA on the
ASEAN Secretariat official site, see:

http://www.aseansec.org/15278.htm

For an article on the general present
situation of the negotiations, see:

SEN
Amiti, "Asean FTA may be a no-show", The Economic Times,
September 17, 2007.

For an article on the palm oil issue,
see:

CHANDRASHEKHAR
G, "Malaysia hopeful of more trade with India", Business Line,
India, March 14, 2007.

EU-India Trade and
Investment Agreement

In October 2006 the 7^th
EU-India Summit was held in Helsinki, where both sides agreed on
launching negotiations for a Trade and Investment Agreement that aims
to deepen and widen trade and investment between India and the 27
members of the EU (Austria, Belgium, Bulgaria, Czech Republic,
Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands,
Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and
United Kingdom). In trade in goods both sides are interested in
elimination of tariffs on substantially all trade, with a minimal
coverage of 90% of the bilateral trade in volume and tariff lines.
Trade in services is expected to go beyond WTO-GATS commitments. No
mode of supply will be excluded and the agreement is expected to
provide for the elimination of substantially all discrimination
between the parties. On investment, the idea is to provide market
access and national treatment to investors, free the flow of payments
and investment-related capital movement. Additionally, Public
Procurement related measures that enhance transparency and market
access opportunities will be included as well as Intellectual
Property Rights, principally related to Geographical Indications.

In April 2007,
Minister of External Affairs of the EU agreed on the mandate for the
European Commission (EC) to negotiate an FTA with India as well as
with ASEAN and South Korea. Unlike previous trade agreements signed
with weak developing countries, these new series of agreements target
countries or regions with high growth potential and difficult market
access for European business. Two initial rounds of
negotiations were held in Brussels in June 2007 and New Delhi in
October 2007 with very little information provided neither to the
media or the public. The market access round is expected to take
place in December 2007 in New Delhi. India's draft negative list
has been prepared and government is in process of consultation with
some stakeholders to finalise it. Newspaper reports indicate that the
list contains 156 agriculture goods and 246 manufacture goods. ‘In
the case of fish, the negative list was narrowed down to just a few
categories as India's export interests weigh more than import
competition apprehensions of some sections of the industry from
Kerala' the report says. Additionally, Indian industries are
interested in tariff cuts on raw materials to access these items
cheaper for production^³³.
In another report, officials told the media that India is more
interested in the services sector ( such as IT and banking) than in
goods, in which previous agreements already grant duty free entry
into EU to 60% of Indian exports to the region (and the remaining are
very sensitive goods for EU, like leather and textiles). The EU, on
the other hand, is interested in getting access to the Indian
manufacturing sector^³⁴.

For the full text of the
High Level Trade Group (HLTG) Report, see:

High
Level Trade Group. (2006). "HLTG Report on EU-India Trade and
Investment Agreement to the EU-India Summit", EU-India Summit:
Helsinki, October.

For a
comprehensive article on the negotiations, see:

SUBHAN
Malcolm, "What
will India gain from the FTA with the EU", New Europe, Brussels,
July 13, 2007.

8. Abbreviations

AI-FTA	ASEAN-India-FTA
APTA	Asia Pacific Trade Agreement
ASEAN	Association of South East Asian Nations
BIMSTEC	Bay of Bengal initiative for Multi-Sectoral Technical and Economic Cooperation
CECA	Comprehensive Economic Cooperation Agreement
CEPA	Comprehensive Partnership Agreement
EC	European Commission
EFTA	European Free Trade Area
EHS	Early Harvest Scheme
EU	European Union
GCC	Gulf Cooperation Council
FA	Framework Agreement
FTA	Free Trade Area
HLTG	High Level Trade Group
IBSA	India-Brazil-South Africa Trilateral Cooperation Forum
ISFTA	India-Sri Lanka Free Trade Agreement
JSG	Joint Study Group
JTF	Joint Task Force
JWG	Joint Working Group
MERCOSUR	Mercado Comun del Sur
MRA	Mutual Recognition Agreement
PTA	Preferential Trade Agreement
RoO	Rules of Origin
RTIA	Regional Trade and Investment Area
SAARC	South Asian Association for Regional Cooperation
SACU	Southern African Customs Union
SAFTA	South Asian Free Trade Area
T-FTA	India-MERCOSUR-SACU Trilateral Free Trade Agreement
TNC	Trade Negotiating Committee
UNESCAP	United Nations Economic and Social Commission for Asia and the Pacific
WTO	World Trade Organisation

9. References

Articles

Anonymous, "Banking issues to dominate
India-Singapore CECA talks", The Financial Express, India, March
15, 2007.
Anonymous, "Botswana supports India, SACU FTA" The
Hindu, India, December 8, 2006.
Anonymous, "Chile keen on free trade pact", The
Telegraph, India, July 15, 2007.
Anonymous, "EFTA continues to extend its influence",
Swiss Info, Switzerland, May 9, 2007.
Anonymous, "FICCI warns against FTA with China",
Rediff, India, October 18, 2007.
Anonymous, "Gcc-India FTA to be reality soon",
Middle East North African Financial Network, July 17, 2007.
Anonymous, "India bargains on services with EU",
The Economic Times, India, October 3, 2007.
Anonymous, "India offers new concessions for ASEAN
FTA", Business Standard, India, April 17, 2007.
Anonymous, "India restarts free trade talks with
BIMSTEC", The Economic Times, India, October 27, 2006.
Anonymous, "India start FTA talks with Brazil, S
Africa this week", The Times of India, India, October 14, 2007.
Anonymous, "India wants to get internal consensus on
FTA issues", The Hindu, India, June 15, 2007.
Anonymous,
"India, Thailand wrapping up tariff negotiations by June",
Business Line, India, April 12, 2007.
Anonymous,
"India-Nepal trade treaty automatically renewed",
NepalBizNews.com, Nepal, March 6, 2007.
Anonymous,
"Indian trade delegation to visit Sri Lanka", The Economic
Times, India, March 23, 2007.
Anonymous,
"Indo-Russian JSG proposes to boost bilateral trade", The Hindu,
India, July 12, 2007.
Anonymous,
"Japan, India start second round of trade talks", ABC Radio,
Australia, April 9, 2007.
Anonymous, "Ministers differ on India-Asean FTA",
The Economic Times, India, May 4, 2007.
Anonymous,
"Nath sees trade pact with Thailand", The News International,
Pakistan, April 16, 2007.
Anonymous, "PM
favours opening up of legal sector", Business Line, India, October
6, 2006.
Anonymous, "Revenue Deptt against crude oil in FTA
with GCC", The Economic Times, India, July 29, 2007.
Anonymous,
"Sino-Indian RTA study to be completed by October", Zee News,
India, May 30, 2007.
Anonymous,
"Thailand eyes expansion of FTA deal to India", MCOT, Thailand,
April 4, 2007.
BHUYAN
Rituparna, "India-South Korea FTA in final stage", Business
Standard, India, October 9, 2007.
BHUYAN
Rituparna, "India-Thailand FTA delayed", Business Standard,
India, June 19, 2007.
BHUYAN
Rituparna, "Indo-Asean FTA talks may slip on palm oil", Business
Standard, India, October 1, 2007.
CHANDRA MOHAN
N., ‘Thai curry and Indian palates", The Financial Express,
India, July 5, 2007.
CHANDRASHEKHAR
G, "Malaysia hopeful of more trade with India", Business Line,
India, March 14, 2007.
IYER Harish,
"The Bangkok Agreement: Prospects for trade expansion in the
Asia-Pacific Region", in Bulletin on Asia-Pacific Perspectives
2003/04, UNESCAP, Bangkok, November 2003.
JAYASAWAL
Rajeev, SUBRAMANIAN G. Ganapathy, "Farmers get a shield in
India-EU FTA", The Economic Times, India, October 22, 2007.
K.R. Srivats,
"Govt effects further import duty cuts with Singapore", Business
Line, India, April 4, 2007.
KHANNA Vikram,
"India go-ahead for S'pore banks expected by July", The Business
Times, Singapore, March 26, 2007.
KURIAN Vinson,
"FTAs threatening to hit domestic pepper trade", Business Line,
India, December 1, 2004.
MUKHERJI
Biman, "Rubber planters wary of free-trade pact", Reuters,
India, April 17, 2007.
N. Anand, "Sri Lanka to announce FTA with India my
March '08", The Hindu, India, June 9, 2007.
NARENDRANATH KG, "India turns wiser on bilateral
trade pacts", The Economic Times, India, June 21, 2007.
PARANJOY GUHA
Thakurta, SHIVAM Vij, "Indian business groups wary of Thai FTA",
Bangkok Post, Thailand, October 21, 2006.
PEER
Mohammad, "SAFTA moot for removing non-tariff
barriers", The Business Recorder, Pakistan, April 19, 2007.
REDDY B.
Muralidhar, "India to remove port curbs on Sri Lankan tea,
apparel", The Hindu, India, April 1, 2007.
S. Arun,
"Tough FTA rules to curb trade diversion", The Financial
Express, India, July 9, 2007.
S. Arun,
VENKATESH Mahua, "Singapore keen on investing in industrial parks"
Business Line, India, November 11, 2006.
SAMARAWEERA
Dilshani, "India, Sri Lanka to open up services markets this
year", The Sunday Times, Sri Lanka, April 8, 2007.
SEN
Amiti, "Asean FTA may be a no-show", The Economic Times, India,
September 17, 2007.
SIRIMANNA Bandula, "Sri Lanka and India soon to open
up services markets", The Financial Times, Sri Lanka, May 13,
2007.
SUBHAN
Malcolm, "What
will India gain from the FTA with the EU", New Europe, Brussels,
July 13, 2007.
THOMAS K Joe,
"A Sub continental free trade utopia", in Himal South Asian,
Delhi, January 2004.

Official Documents

Government of
India. (2004). Agreement on South Asian Free Trade Area.
Ministry of External Affaires: Islamabad, January.
Government of
India, Government of Sri Lanka. (1998). Free Trade agreement
Between the Republic of India and the Democratic Socialist Republic
of Sri Lanka. Ministry of External Affairs, Department of
commerce: New Delhi, December.
Government of
India, Government of Thailand. (2003). Framework Agreement for
Establishing Free Trade Area between the Government of the Republic
of India and the Government of the Kingdom of Thailand. Ministry
of Commerce and Industry, Ministry of Commerce: Bangkok, October.
Government of
India, Government of Singapore. (2005). Comprehensive Economic
Cooperation Agreement between the Republic of India and the Republic
of Singapore. Ministry of External Affaires, Ministry of
External Affairs: New Delhi, June.
Government of
India. (2003). Framework agreement on Comprehensive Economic
Cooperation between the Republic of India and the Association of
South-East Asian Nations. Ministry of External Affairs: Bali,
October.
Government of
Bhutan, Government of India. (2006). Agreement on Trade Commerce
and Transit between the Government of the Republic of India and the
Royal Government of Bhutan. Ministry of Commerce and Industry,
Ministry for trade and Industry: New Delhi, January.
Government of
India, Government of Nepal. (1991). Treaty of Trade between the
Government of the Republic of India and his Majesty's Government
of Nepal. Ministry of Commerce and Industry, Ministry of
Commerce: New Delhi, December.
High Level
Trade Group. (2006). HLTG Report on EU-India Trade and Investment
Agreement to the EU-India Summit. EU-India Summit: Helsinki,
October.

Web
Sites

ASEAN
secretariat site, External Relations, India:
http://www.aseansec.org/4971.htm
Asia Regional
Integration Centre site, Free Trade Agreement Database for Asia, FTA
by Country / All, India: http://aric.adb.org/FTAbyCountryAll.php
Bilaterals.org
site: www.bilaterals.org
Federation of
Indian Chambers of Commerce and Industry site, International,
Country reports:
http://www.ficci.com/international/non-jbc-countries.htm
International
Enterprise Singapore site, Free Trade Agreements, Singapore's FTA,
India (CECA):
http://www.iesingapore.gov.sg/wps/portal/FTA/SingaporeFTAs/ConcludedFTAs/CECA
Department of
Commerce, Government of India site, Trade Agreements, see:
http://commerce.nic.in/trade/international_ta.asp?id=2&trade=i
Department of
Commerce, Government of India site, Publications, Annual Report
2006-2007, Commercial Relations and Trade Agreements, see:
http://commerce.nic.in/publications/annualreport_commercial.asp
Lankan
Commerce Ministry site, Regional / Bilateral Trade Agreements, Indo
Sri Lanka Free Trade Agreement (ISFTA):
http://www.doc.gov.lk/regionaltrade.php?mode=inop&link=isfta
SAARC
secretariat site: http://www.saarc-sec.org

1
Seven countries; Bangladesh, India, Lao PDR, Republic of Korea, Sri
Lanka, Philippines and Thailand met at Bangkok and agreed to a list
of products for mutual tariff reduction. This agreement was ratified
by five of the seven countries. Thailand and the Philippines due to
their ASEAN commitments, which came into force at that time, did not
ratify. Lao PDR is not an effective participating member since it
has not issued its Customs Notification on the tariff concessions
granted to other participating States.

2
IYER Harish, "The Bangkok Agreement: Prospects for trade expansion
in the Asia-Pacific Region", in Bulletin on Asia-Pacific
Perspectives 2003/04, UNESCAP: Bangkok, November 2003.

3
Anonymous, "India-Nepal trade treaty automatically renewed",
NepalBizNews.com, Nepal, March 6, 2007.

4
Framework Agreements lay the basis
for the eventual establishment of a Free Trade Agreement

5
A positive list is a list of products that are selected for tariff
cuts under the liberalization programme, whereas a negative list
enumerates products to be excluded from the tariff reduction
programme.

6
Anonymous, "India restarts free trade talks with BIMSTEC", The
Economic Times, India, October 27, 2006.

7
Near shoring means companies setting up strategic base in a foreign
country that is close to a target export market, in this case the
USA.

8
Anonymous, "Chile keen on free trade pact", The Telegraph,
India, July 15, 2007.

9
Anonymous, "FICCI warns against FTA with China", Rediff, India,
October 18, 2007.

10
Anonymous, "EFTA continues to extend its influence", Swiss Info,
Switzerland, May 9, 2007.

11
Anonymous, "Revenue Dept against crude oil in FTA with GCC", The
Economic Times, India, July 29, 2007.

12
Anonymous, "GCC-India FTA to be reality soon", Middle East North
African Financial Network, July 17, 2007.

13
Anonymous, "Japan, India start second round of trade talks", ABC
Radio, Australia, April 9, 2007.

14
S. Arun, "Tough FTA rules to curb trade diversion", The
Financial Express, India, July 9, 2007.

15
Anonymous, "Indo-Russian JSG proposes to boost bilateral trade",
The Hindu, India, July 12, 2007.

16
BHUYAN Rituparna, "India-South Korea FTA in final stage",
Business Standard, India, October 9, 2007.

17
ibid

18
Anonymous, "Botswana supports India- SACU FTA" The Hindu, India,
December 8, 2006.

19
Anonymous, "India start FTA talks with Brazil, S Africa this
week", The Times of India, India, October 14, 2007.

20
List as of June 2006 accessed from
http://www.saarc-sec.org/main.php?t=2.1.6
in October 2007

21
Bangladesh, Bhutan, Maldives and Nepal are classified as LDCs based
on their lower economic level compared to other members.

22
Anonymous, "Bangladesh sets SAFTA strategy tomorrow",
South Asian Media Net, February 11 2007.

23
KURIAN Vinson, "FTAs threatening to hit domestic pepper trade",
Business Line, India, December 1, 2004.

24
SIRIMANNA Bandula, "Sri Lanka and India soon to open up services
markets", The Financial Times, Sri Lanka, May 13, 2007.

25
N. Anand, "Sri Lanka to announce FTA with India my March '08",
The Hindu, India, June 9, 2007.

26
For the links that are no longer available, you can still accede to
the original article through our server.

27
Inverted duty scheme implies that the duty paid by the producer on
the imported raw material is higher than the duty on his finished
product. Third countries export means that industries of the export
country part of the agreement do a little change on a product
imported from a third country and export it as domestic product to
the import country, under preferential treatment provided by the
bilateral agreement

28
CHANDRA MOHAN N., ‘Thai curry and Indian palates", The Financial
Express, Indian, July 5, 2007.

29
MRA provides for mutual recognition of qualifications in each
country which allows professionals to supply services in the
importing country.

30
An Early Harvest Scheme (EHS) provides India to eliminate all
tariffs for Singapore on 1^st August 2005. Phased tariff
elimination provides India will reduce its tariff progressively till
total elimination by April 1^st 2009. Finally a phased
tariff reduction provides India to reduce its tariffs progressively
to 50% reduction by April 1^st 2009.

31
National treatment guarantees for foreign products and suppliers of
the products the same treatment in the domestic market than to local
products or their suppliers. Some other aspects are that, in
addition to the access to the courts of justice and administrative
tribunals and agencies in the usual degrees of jurisdiction, the
investors can seek dispute settlement through
consultation/negotiation or international arbitration tribunals,
once the investment is established. Also, Investors are free to
appoint their senior management but both governments may require
particular national presence in the Board of Directors.

32
BHUYAN Rituparna, ‘Indo-ASEAN FTA talks may slip on palm oil',
Business Standard, India, October 1, 2007.

33
JAYASAWAL Rajeev, SUBRAMANIAN G. Ganapathy, "Farmers get a shield
in India-EU FTA", The Economic Times, India, October 22, 2007.

34
Anonymous, "India bargains on services with EU", The Economic
Times, India, October 3, 2007.

India: Bilateral and Regional Trade Agreements: An update

Overview:

Overview: