South Korea wants more tariff lines to go as part of trade pact upgrade

Amiti Sen New Delhi | Updated on January 08, 2018

But New Delhi wary as CEPA has not benefited industry much

South Korea wants elimination of import tariffs on a larger number of items it trades with India as part of the upgrading process of the comprehensive economic partnership agreement (CEPA) between the two.

India, however, is not too keen to take on substantial increase in commitments as the pact has not benefited the Indian industry much.

“At a recent meeting for upgrading of CEPA in New Delhi, both sides discussed the items where they want the other side to lower duties. South Korea is more interested on the upgradation. India, on the other hand, would prefer to take on greater commitments as part of the Regional Comprehensive Economic Partnership being negotiated between 16 countries including the ASEAN, where both the countries are members,” a government official told BusinessLine.

“It might be that the South Koreans are unsure about when the RCEP would finally be signed and implemented. They think that getting larger market access in India through a bilateral treaty is a safer bet,” the official added.

The items where South Korea wants India to lower or eliminate duties including a variety of chemicals, steel products, beauty products, agriculture products and consumer durables. India is interested in sectors such as IT, education, agricultural products and health care.

Industry pressure

India is a wary about opening its markets further under the CEPA with South Korea, which was implemented in 2010, as the Indian industry has been at the receiving end of the pact over the last few years.

In 2015-16, South Korea’s imports from India dropped sharply by 23.5 per cent to $3.4 billion, which was lower than the level of exports in 2012-13. While India’s exports to the country recovered in 2016-17, at $4.24 billion it is at the same level as in 2012-13.

“Since New Delhi is already negotiating an ambitious trade pact with RCEP members, which includes South Korea, it does not see much point in giving more market access to the country bilaterally. It will probably agree to very low level of upgrade,” the official said.

Interestingly, because of South Korea’s push, four rounds of meeting for CEPA upgrading have already taken place over the last four months.

Under the India-South Korea CEPA, Korea will phase out or reduce tariffs on 90 per cent of Indian exports while India would phase out or cut tariffs on 85 per cent of Korean exports.

Published on January 04, 2018

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