Preferential Trade updates March 2024

March 26, 2024

EAEU, Mongolia expect to complete preparation of temporary free trade agreement

On March 13–14, the Eurasian Economic Commission held consultations on the conclusion of a temporary trade agreement between the Eurasian Economic Union and its Member States with Mongolia, involving limited commodity coverage. The countries of the Eurasian Economic Union (EAEU) and Mongolia intend to complete the preparation of a temporary agreement on setting up a free trade zone by the end of 2024, the Eurasian Economic Commission (EEC) said following consultations with Mongolian representatives earlier this week. The temporary agreement envisions a limited range of goods which it would apply to. Mongolia currently has observer status at the EAEU, whose members are Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. The EEC and the Mongolian government concluded a cooperation agreement in June 2015. They put together a joint research team in 2020 to explore the feasibility of concluding a free trade agreement.

EU – Vietnam FTA: update to Harmonised System 2022

The Trade Committee of the EU-Vietnam FTA has adopted on 16 January 2024 the Decision No 2/2024 amending Annex II (the so-called ‘product-specific rules’) to Protocol 1 (the Protocol concerning the definition of the concept of ‘originating products’ and methods of administrative cooperation). The amendment updates the product-specific rules to the 2022 version of the Harmonised System. It also introduces a rule for leather products of Chapter 41, and a rule for knitted and crocheted products of Heading 6212, which were missing in the initial agreement.

EU - Chile Advanced Framework Agreement

On 29 February 2024, the (EU) Parliament approved the Advanced Framework Agreement between the EU and Chile and the complementary Agreement on Trade and Investment Liberalisation. The agreements lay down the framework for deeper and broader political and economic cooperation between the like-minded partners on global issues, such as foreign and security matters, sustainable development, environmental protection, climate change, sustainable energy, rule of law and human rights. The Advanced Framework will need to be ratified by member states.

EU and the Philippines announce resumption of negotiations for a free trade agreement

EU and the Philippines officially announced the resumption of negotiations for an ambitious, modern and balanced free trade agreement (FTA) – with sustainability at its core. Trade agreements such as these are a cornerstone of the EU's economic security, opening new opportunities for businesses and consumers, strengthening supply chains and promoting sustainable trade practices. An FTA with the Philippines, a booming economy of 115 million people in the heart of the strategically important Indo-Pacific region, would therefore be a valuable addition to the EU's network of trade deals.

The EU aims for a comprehensive FTA with the Philippines that includes ambitious market access for goods, services, investment and government procurement; the removal of obstacles to digital trade and trade in energy and raw materials, thereby supporting the digital and green transitions; swift and effective sanitary and phyto-sanitary (SPS) procedures; sustainable food systems (SFS); the protection of intellectual property rights including Geographical Indications (GIs) and robust and enforceable disciplines on trade and sustainable development (TSD) – in line with the Commission's TSD review Communication of June 2022, supporting high levels of protection for workers' rights, the environment, and the achievement of ambitious climate goals.

EU - New Zealand agreement

On 28 February 2024, the free trade agreement between the European Union and New Zealand was published. This agreement creates new opportunities for import and export operations between the two parties, including by removing all tariffs on EU exports to New Zealand. Source: Link

EU and Philippines relaunch free trade talks

The European Union and the Philippines announced the resumption of negotiations for a free trade agreement, with Brussels saying the first round of talks should begin “later this year”.
The two sides announced their intention to reopen negotiations during a visit to Manila by EU chief Ursula von der Leyen last year.

India, Peru to hold seventh round of FTA talks in April

India and Peru are trying to speed up talks on the proposed bilateral free trade agreement (FTA), after it got delayed due to the Covid-19 pandemic and have scheduled the seventh round of negotiations in New Delhi, from April 8, prior to which offer lists on goods and services are likely to be exchanged.

India - European Free Trade Association (EFTA) agreement entered into force.

On 10 March 2024, Member States of the European Free Trade Association – Iceland, Liechtenstein, Norway, and Switzerland – and the Republic of India signed a comprehensive Trade and Economic Partnership Agreement (TEPA). India has been working on a Trade and Economic Partnership Agreement (TEPA) with EFTA countries comprising Switzerland, Iceland, Norway & Liechtenstein. The Union Cabinet chaired by the Hon’ble Prime Minister has approved signing of the TEPA with EFTA States. EFTA is an inter-governmental organization set up in 1960 for the promotion of free trade and economic integration for the benefit of its four Member States.

The agreement comprises of 14 chapters with main focus on market access related to goods, rules of origin, trade facilitation, trade remedies, sanitary and phytosanitary measures, technical barriers to trade, investment promotion, market access on services, intellectual property rights, trade and sustainable development and other legal and horizontal provisions. EFTA is an important regional group, with several growing opportunities for enhancing international trade in goods and services. EFTA is one important economic block out of the three (other two - EU &UK) in Europe. Among EFTA countries, Switzerland is the largest trading partner of India followed by Norway.

The highlights of the agreement are:

  • EFTA has committed to promote investments with the aim to increase the stock of foreign direct investments by USD 100 billion in India in the next 15 years, and to facilitate the generation of 1 million direct employment in India, through such investments. The investments do not cover foreign portfolio investment.
  • For the first ever time in the history of FTAs, a legal commitment is being made about promoting target-oriented investment and creation of jobs.
  • EFTA is offering 92.2% of its tariff lines which covers 99.6% of India’s exports. The EFTA’s market access offer covers 100% of non-agri products and tariff concession on Processed Agricultural Products (PAP).
  • India is offering 82.7% of its tariff lines which covers 95.3% of EFTA exports of which more than 80% import is Gold. The effective duty on Gold remains untouched. Sensitivity related to PLI in sectors such as pharma, medical devices & processed food etc. have been taken while extending offers. Sectors such as dairy, soya, coal and sensitive agricultural products are kept in exclusion list.
  • India has offered 105 sub-sectors to the EFTA and secured commitments in 128 sub-sectors from Switzerland, 114 from Norway, 107 from Liechtenstein, and 110 from Iceland.
  • TEPA would stimulate our services exports in sectors of our key strength / interest such as IT services, business services, personal, cultural, sporting and recreational services, other education services, audio-visual services etc.
  • Services offers from EFTA include better access through digital delivery of Services (Mode 1), commercial presence (Mode 3) and improved commitments and certainty for entry and temporary stay of key personnel (Mode 4).
  • TEPA has provisions for Mutual Recognition Agreements in Professional Services like nursing, chartered accountants, architects etc.
  • Commitments related to Intellectual Property Rights in TEPA are at TRIPS level. The IPR chapter with Switzerland, which has high standard for IPR, shows our robust IPR regime. India’s interests in generic medicines and concerns related to evergreening of patents have been fully addressed. 
  • India signals its commitment to Sustainable development, inclusive growth, social development and environmental protection
  • Fosters transparency, efficiency, simplification, harmonization and consistency of trade procedures
  • TEPA will empower our exporters access to specialized inputs and create conducive trade and investment environment. This would boost exports of Indian made goods as well as provide opportunities for services sector to access more markets.
  • TEPA provides an opportunity to integrate into EU markets. Over 40% of Switzerland’s global services exports are to the EU. Indian companies can look to Switzerland as a base for extending its market reach to EU.
  • TEPA will give impetus to “Make in India” and Atmanirbhar Bharat by encouraging domestic manufacturing in sectors such as Infrastructure and Connectivity, Manufacturing, Machinery, Pharmaceuticals, Chemicals, Food Processing, Transport and Logistics, Banking and Financial Services and Insurance.
  • TEPA would accelerate creation of large number of direct jobs for India’s young aspirational workforce in next 15 years in India, including better facilities for vocational and technical training. TEPA also facilitates technology collaboration and access to world leading technologies in precision engineering, health sciences, renewable energy, Innovation and R&D.

India – UAE CEPA: CBIC notifies third tranche 

India customs authority has published the updated preferential duty schedule of India – UAE CEPA. Update includes the changes in the preferential duty rates for various products across the different tariff chapters. 

India – Mauritius CEPA: CBIC notify fourth tranche

India customs authority has published the updated preferential duty schedule of India – Mauritius CEPA. Update includes the changes in the preferential duty rates for various products across the different tariff chapters. 

Indonesia, Sri Lanka launch preferential trade agreement negotiations

Jakarta. Indonesia and Sri Lanka launched the negotiations for a preferential trade agreement (PTA) after waiting since 2017. Indonesia wants the first round of negotiations to take place in the first semester of 2024.

India and UK FTA Update

India is unlikely to allow unfettered access of electric vehicles (EVs) from the UK, one of the two key contentious issues resulting into a deadlock in the free trade negotiations even after 14 rounds of talks since January 2022. The other issue is related to India’s demand for easy business visas. The UK is averse to facilitate India’s services trade by relaxing business mobility norms under the proposed pact, but it wants India to open up the vast Indian automobile market, particularly for EVs. The India government notified a policy to promote India as an EV manufacturing destination by slashing duty on limited number of imports of such cars to 15% (from up to 100%), provided foreign automakers commit a minimum $500 million (around ₹4,150 crore) in three years and take up local value addition from 25% to 50% in five years.

India is the world’s third largest automobile market worth $151 billion ( ₹12.5 lakh crore) in 2023, according to official data. The sector is expected to cross $300 billion ( ₹24.9 lakh crore) by 2030. The negotiating teams were not in a position to conclude an agreement even as the round 14 closed few days back. 

Malaysia and Indonesia explore ASEAN-Egypt free trade agreements

Indonesia and Malaysia have begun talks to explore the possibility of a free trade pact between the Association of Southeast Asian Nations and Egypt. Indonesia and Malaysia are among the founding members of ASEAN, a regional bloc established in 1967. The union is the world’s fifth-largest economy and home to some 670 million people.

The two countries have been working to increase their trade engagement with Egypt in recent years. Indonesia recorded a $1.11 billion trade surplus with the North African nation last year, while Egypt is Malaysia’s third-largest trading partner in Africa in 2022, with a $1.08 billion trade value. Officials from the Indonesian Embassy in Cairo and the Malaysia External Trade Development Cooperation, or MATRADE, held a meeting in Cairo to discuss ways to boost cooperation between the Southeast Asian bloc and Egypt, the Indonesian Ministry of Trade said in a statement.

Peru and EU agree on cooperation activities to ensure respect of labour rights

The European Commission and the Peruvian government have agreed on a list of technical cooperation activities to implement the labour rights commitments taken under the EU-Colombia-Peru-Ecuador Trade Agreement. Commission has published a list of cooperation activities agreed with Peru to ensure the respect and implementation of labour rights in the country, according to six priorities defined jointly. The objective of the agreed list is broad and ambitious: it aims at strengthening the implementation of the labour system in Peru as a whole. The positive outcome stems from the implementation of the Trade and Sustainable (TSD) chapter of the EU-Colombia-Peru-Ecuador Trade Agreement. It demonstrates the important role of civil society and NGOs in alerting and monitoring the respect of TSD provisions in third countries. It also shows how free trade agreements provide a crucial platform of engagement to discuss and jointly tackle issues such as the respect of labour rights. The implementation of the list of activities covers a period of two years. It will be supported by an extensive technical and financial programme by the EU. The Commission also relies on the support of the civil society organisations in Europe and in Peru, to help with the concrete implementation of activities on the ground.

South Korea, Britain to hold new round of talks for upgrading FTA

South Korea was to hold the second round of negotiations with Britain for upgrading the bilateral free trade agreement (FTA) in response to changing global trade and business circumstances. The negotiation is scheduled to kick off in to run through Friday, where the two sides will discuss how to improve the bilateral pact by reflecting new global trade norms on digital economy, service sectors and other issues, according to the Ministry of Trade, Industry and Energy. The first round of talks for the FTA revision took place in Seoul in January.

Spain - EU trade deal helps Spanish company bring sustainable packaging to the Caribbean

The EU-CARIFORUM Economic Partnership Agreement has helped Ly Company to invest in the Dominican Republic and export Europe-made machinery to its local plant there. Thanks to the EU-CARIFORUM Economic Partnership Agreement (EPA), Spain's Ly Company has been able to invest in the Dominican Republic and to export Europe-made machinery to its local plant there without paying any customs duties. The investment has created new jobs and made an important contribution towards more environmentally friendly practices in the region. Thanks to the preferences granted by the EU-CARIFORUM Economic Partnership Agreement, Ly Company Caribe was able to import European machinery as well as different raw materials and inputs duty-free. This was a win-win, since using Europe-made machinery supports European jobs, while it also helps the Dominican Republic to move up the value chain by producing finished sustainable products.

Switzerland signs free trade deal with India

The Swiss Economic Minister Guy Parmelin and his counterparts from Iceland, Liechtenstein and Norway signed a free trade agreement with the Indian Minister of Commerce. Switzerland and the other member states of the EFTA are the first European partners to sign a free trade agreement with India. 

The Swiss economic ministry pointed out that India is the most populous country in the world. Its growing middle class, in particular, gives it strong growth potential. India currently levies very high customs duties on most imported products. India will abolish or partially liberalise, with immediate effect or after transitional periods, the customs duties on 95.3% of industrial products imported from Switzerland (with the exception of gold).

India will also grant Switzerland duty-free access to its market for certain agricultural products after a transitional period of up to ten years. This will enhance the competitiveness of Swiss exports to India. The concessions granted by Switzerland to India on agricultural products are in line with current free trade agreements and are in line with Swiss agricultural policy, the ministry emphasised.

Improvements have been achieved in the area of intellectual property rights, particularly with regard to legal certainty, patent procedures and the protection of the “Swiss” designation (Swissness). Access to medicines in India remains unaffected. Swiss economic players will gain broad access to the Indian market and will benefit from improved legal conditions, legal certainty and predictability, the press release adds.The parliamentary approval procedure will be launched without delay so that Switzerland can ratify the agreement by 2025 at the latest, concluded the economic ministry.

UK embarks on post-Brexit trade talks with Turkey

The UK has opened trade talks with Turkey in an effort to secure another post-Brexit deal. The existing deal, signed in 2021, largely replicates the previous EU deal with Turkey that was negotiated in the 1990s, and the UK is now looking to “modernise” the agreement with a focus on the service sector. Trade between the two countries was worth £26 billion in 2022, when despite the UK’s strength in services, the sector accounted for only 27% of British exports to Turkey. The Department for Business and Trade said the new deal could be a boost for the services sector, while giving British consumers improved access to imported Turkish food such as nuts, bulgar wheat and tomatoes.


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