Home  /  Daily Current Affairs  /  29-12-2022 / Trade agreements with Australia and UAE

Trade agreements with Australia and UAE

Posted on December 29, 2022 by admin1  647

In News

  • Recently, Various export promotion councils (EPCs) praised the trade agreements signed by India with the UAE and Australia.
    • They said that these agreements will help India in boosting its exports by granting preferential access to those markets for Indian products. 

More about the news

  • The recent pacts:
    • India–UAE Comprehensive Economic Partnership Agreement (CEPA) which became effective from May 2022.
    • The India-Australia Economic Cooperation and Trade Agreement (ECTA) will come into force from December 29. 
      • India is the sixth largest trading partner of Australia.
      • India’s bilateral trade in goods and services with Australia rose 106.5% to $25.04 billion so far in 2022 compared to 2021.
  • FTA’s and PTA’s 
    • India has signed 13 free trade agreements (FTAs) and six preferential pacts so far with its trading partners for ensuring greater market access for domestic goods and promoting exports.
      • The country has recently signed three such agreements with Mauritius, the UAE and Australia.
      • India is also actively engaged in FTA negotiations with some of its trading partners including the UK, European Union and Canada.

Significance of the trade agreement with Australia 

  • Job creation: The trade agreement is expected to create 10 lakh jobs and raise Indian merchandise exports to Australia by $10 billion.
  • Cheap imports: the ECTA will also allow zero duty on 100% tariff lines and provide cheaper raw materials to steel and aluminium sectors. The trade pact will also raise the bilateral trade volume to $45-50 billion in five years.
  • Supply chain resilience: ECTA will help Australian manufacturers strengthen their supply chain resilience and enhance trade diversification while also connecting the two complementary and stable economies. 
  • Jewellery exports: ECTA would help double India’s gem and jewellery exports to Australia, from its current $350 million to $800 million in three years.
  • Export potential for plastics from India stands at $6 billion to Australia.
    • Import duty applicable in Australia had been reduced on all tariff lines for plastic products with immediate effect which would act as a great booster for outbound shipments. 
  • Zero duty access: India is providing zero-duty access to Australia for 70.3 per cent of its tariff lines.
    • India has offered zero duty access on coal, alumina calcined, manganese ore, copper concentrates, bauxite, sheep meat, rock lobster, macadamia nuts, cherries, and wool.
    • Australia is offering zero-duty access to India for about 96.4 per cent of exports. 

Significance of the trade agreement with UAE

  • Boost in exports: The country had benefited from preferential market access provided by the UAE on more than 97% of its tariff lines which account for 99% of Indian exports to the region in value terms.
  • Bilateral trade: The CEPA with the UAE is expected to increase the total value of bilateral trade in goods to over $100 billion and in services to more than $15 billion within five years.
  • Jewellery trade: Post the India-UAE CEPA, gems and jewellery exports to the region witnessed an overall export growth of 20% to the region.
  • Export potential for plastics from India stands at $5 billion to the UAE.
    • Import duty applicable in the UAE on 260 plastic products has been reduced from 5% to zero with immediate effect. 

Different Types of Economic Engagements:

  • Preferential Trade Agreement (PTA): 
    • In a PTA, two or more partners agree to reduce tariffs on an agreed number of tariff lines. 
    • The list of products on which the partners agree to reduce duty is called a positive list. 
    • India MERCOSUR PTA is such an example. 
    • However, in general PTAs do not cover substantially all trade. 
  • Free Trade Agreement (FTA): 
    • In FTAs, tariffs on items covering substantial bilateral trade are eliminated between the partner countries but each country maintains an individual tariff structure for non-members. 
    • The key difference between an FTA and a PTA is that while in a PTA there is a positive list of products on which duty is to be reduced; in an FTA there is a negative list on which duty is not reduced or eliminated.
  • Comprehensive Economic Cooperation Agreement (CECA) and Comprehensive Economic Partnership Agreement (CEPA): 
    • These terms describe agreements which consist of an integrated package on goods, services and investment along with other areas including IPR, competition etc. 
  • Custom Union: 
    • In a Customs union, partner countries may decide to trade at zero duty among themselves, however they maintain common tariffs against the rest of the world. 
    • An example is Southern African Customs Union (SACU) amongst South Africa, Lesotho, Namibia, Botswana and Swaziland. 
    • The European Union is also an outstanding example. 
  • Common Market: 
    • Integration provided by a Common market is one step deeper than that by a Customs Union. 
    • A common market is a Customs Union with provisions to facilitate free movements of labour and capital, harmonise technical standards across members etc. 
    • The European Common Market is an example. 
  • Economic Union: 
    • Economic Union is a Common Market extended through further harmonisation of fiscal/monetary policies and shared executive, judicial & legislative institutions.

Source: TH

 
Previous article Delimitation Exercise of Assam
Next article Project Nilgiri Tahr