Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

India, UAE to sign Comprehensive Economic Partnership Agreement (CEPA)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Free Trade Agreement (FTA)

Mains level : India and its trade agreements

India and the United Arab Emirates will sign the first-ever bilateral Free Trade Agreement between the two countries.

What is CEPA?

  • The partnership agreement or cooperation agreement is more comprehensive than an FTA.
  • CECA/CEPA also looks into the regulatory aspect of trade and encompasses an agreement covering the regulatory issues.
  • CECA has the widest coverage. CEPA covers negotiation on the trade in services and investment and other areas of economic partnership.
  • It may even consider negotiation in areas such as trade facilitation and customs cooperation, competition, and IPR.
  • India has signed CEPAs with South Korea and Japan.

What is a Free Trade Agreement (FTA)?

  • An FTA is a pact between two or more nations to reduce barriers to imports and exports among them.
  • Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
  • The concept of free trade is the opposite of trade protectionism or economic isolationism.

Key benefits offered by FTA

  • Reduction or elimination of tariffs on qualified: For example, a country that normally charges a tariff of 12% of the value of the incoming product will rationalize or eliminate that tariff.
  • Intellectual Property Protection: Protection and enforcement of intellectual property rights in the FTA partner country is upheld.
  • Product Standards: FTA enhances the ability for domestic exporters to participate in the development of product standards in the FTA partner country.
  • Fair treatment for investors: FTA provides treatment as favorably as the FTA partner country gives equal treatment for investments from the partner country.
  • Elimination of monopolies: With FTAs, global monopolies are eliminated due to increased competition.

 

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