Tariffs would be reduced or eliminated on 93 per cent of Korea’s tariff lines and 85 per cent of India’s tariff lines
Computer engineers, consultants, scientists, public relations experts, English teachers and other professionals in various services would be allowed to freely enter each other’s markets.
New Delhi, Aug 7
India today signed a Comprehensive Economic Partnership Agreement (CEPA) with the Republic of Korea in a bid not only to promote trade of industrial and farm goods but also boost exchanges of manpower, particularly in the services sector between the two countries.
A terse official statement issued here said that the CEPA was signed by the Korean Trade Minister, Mr.Kim Jong-hoon, and the visiting Minister of Commerce and Industry, Mr. Anand Sharma, in Seoul.
Billed as India’s second comprehensive pact with any country, the first being with Singapore in 2005, the CEPA with Korea is also India’s first free trade agreement (FTA) with an OECD country.
Korea is the fifth largest investor in India, with a raft of big brands such as Hyundai, Daewoo, LG and Samsung having a robust presence here. Steel major Posco’s proposal to invest $12 billion in an integrated plant in Orissa with option to buy ores and ship back the finished product to India is a notable investment.
Under the CEPA, tariffs would be reduced or eliminated on 93 per cent of Korea’s tariff lines and 85 per cent of India’s tariff lines.
Reports from Seoul quoting the two Ministers said the CEPA – almost the same as an FTA but with tariffs reduced in phases – would boost bilateral trade and open wider the two nations’ services and investment markets.
The de facto FTA would allow computer engineers, consultants, scientists, public relations experts, English teachers and other professionals in various services domain to freely enter each other’s markets.
India, on its turn, agreed to open its telecommunication, accounting, medical, advertising and banking sectors to Korea.
The Government of India contends that the CEPA would facilitate trade in services through additional commitments made by both the countries to ease movement of independent professional and contractual service suppliers. Both countries have committed to provide national treatment and protect each other’s investments to give a boost to bilateral investment in all sectors save those specifically exempted from it.
The Korea Institute for International Economic Policy said the deal would boost bilateral trade by $3.3 billion a year. Under the CEPA, duties on Korean auto parts, one of the country’s most traded items, would be slashed from the extant average of 12.5 per cent to one per cent over the next eight years. Korea has excluded fisheries and some agricultural products from the tariff exemption, as India has on certain goods of vulnerable nature.
On rules of origin, both countries agreed that the level of foreign content should be a maximum 65 per cent. India would also allow South Korean firms to invest in the machinery, auto manufacturing and electronics sectors, sources said.
While the CEPA would be put up for the Union Cabinet approval, Seoul officials expect the pact to go into effect next January following ratification by the Korean National Assembly.
What the trade says
“We hope a bilateral trade agreement will help us be price competitive both in exports and imports in the long run. However ,a zero duty regime will take time, we don’t see an immediate impact,” said Mr Rajiv Mitra, Head, Corporate Communication, Hyundai Motors India.
“I am yet to see the details of the agreement. …Indian industry, as far as steel is concerned, is capable of meeting all competition and I don’t foresee any issue. While protection is quite low currently, this agreement also gives us an opportunity for foothold since South Korea also imports steel,” said Mr S.K. Roongta, Chairman, Steel Authority of India Ltd.Related Stories:
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