Trade agreements are key instruments in fostering economic ties between nations. This article will outline the types of trade agreements, highlight the recently signed Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates (UAE), and delve into different forms of trade agreements.
The Comprehensive Economic Partnership Agreement (CEPA)
The Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE was finalized and signed on 18th February 2022 during the India-UAE Virtual Summit. The agreement, set to take effect on May 1st, 2022, provides an institutional mechanism to spur and enhance trade relations between the two nations.
Key Features of the India-UAE CEPA
The agreement covers numerous aspects of economic cooperation like trade in goods and services, rules of origin, technical barriers to trade, sanitary and phytosanitary measures, dispute settlement, customs procedures, and intellectual property rights. It also addresses issues related to movement of natural persons, telecom, pharmaceutical products, government procurement, digital trade and investment.
Benefits of the India-UAE CEPA
Under the agreement, India is expected to gain from the preferential market access offered by the UAE, particularly for labor-intensive sectors like gems and jewellery, textiles, leather, sports goods, furniture, agricultural products and engineering goods. The agreement also facilitates market access to a wide range of service sectors, creating novel opportunities for both countries. A unique annex on Pharmaceuticals is part of the pact to ease access to Indian pharmaceutical products in the UAE market.
Background of India-UAE Relations and CEPA
India and the UAE share robust bilateral relations that span politics, culture and trade. The relations have been nurtured through frequent high-level political interactions and vibrant people-to-people exchanges. The India-UAE comprehensive strategic partnership was initiated during the visit of the Indian Prime Minister to the UAE in 2015.
Economic Importance of the UAE and Status of Trade
The UAE has been one of India’s leading trading partners and a major source of energy supply. Trade volume between the two nations stands at around USD 60 billion as of FY 2019-20, with India’s exports to UAE being the second largest. The UAE also ranks eighth in terms of foreign direct investment into India.
About the Comprehensive Economic Partnership Agreement (CEPA)
The Comprehensive Economic Partnership Agreement (CEPA) is a kind of free trade pact that covers negotiations on services and investment, trade facilitation, customs cooperation, competition, and Intellectual Property Rights (IPR). It is a more comprehensive agreement than Free Trade Agreements, enveloping regulatory issues in trade.
Other Types of Trade Agreements
Trade agreements can take different dimensions and levels of integration- these include Free Trade Agreement (FTA), Preferential Trade Agreement (PTA), Comprehensive Economic Cooperation Agreement (CECA), Bilateral Investment Treaty (BIT) and Trade and Investment Framework Agreement (TIFA).
Free Trade Agreements (FTAs), Regional Comprehensive Economic Partnerships (RCEPs) and Preferred Trade Agreements (PTAs)
An FTA is an agreement where two or more countries provide preferential trade terms, tariff concession etc. to the partner country. The Regional Comprehensive Economic Partnership (RCEP) is a Free Trade Agreement (FTA) between the ten member states of the ASEAN and the six other countries. A PTA grants preferential access to certain goods from the countries involved, reducing tariffs for these goods.
Comprehensive Economic Cooperation Agreement (CECA) and Bilateral Investment Treaty (BIT)
A CECA generally covers negotiation on trade tariff and TRQ (Tariff Rate Quotas) rates only. A BIT is an agreement where two countries establish conditions for private investments by their citizens and firms.
Trade and Investment Framework Agreement (TIFA)
TIFA is an agreement that sets a framework to expand trade and resolve disputes between two or more nations. It provides the backbone for enhancing mutual economic ties.
