Preferential Trade updates 04/22

Australia - India Economic Cooperation and Trade Agreement

India and Australia on Saturday signed an economic cooperation and trade agreement under which Canberra would provide duty free access in its market for over 95 per cent of Indian goods such as textiles, leather, jewellery and sports products. The agreement will help in taking bilateral trade from $27 billion to $45-50 billion in the next five years. Australia is offering zero duty access to India for about 96.4 per cent of exports (by value) from day one. This covers many products which currently attract 4-5 per cent customs duty in Australia. Labour intensive sectors which would gain immensely include textiles and apparel, few agricultural and fish products, leather, footwear, furniture, sports goods, jewellery, machinery, electrical goods and railway wagons. Australia is the 17th largest trading partner of India, while New Delhi is Canberra's 9th largest partner. Bilateral trade in goods and services stood at $27.5 billion in 2021. India's goods exports were worth $6.9 billion and imports aggregated to $15.1 billion in 2021. Major exports by India to Australia include petroleum products, textiles and apparels, engineering goods, leather, chemicals and gems and jewellery. 

India - UAE trade pact to be reviewed next year, more items may be included

The India-United Arab Emirates’ Comprehensive Economic Partnership Agreement will be reviewed in a year to consider including certain items that are currently on the exclusion list. The CEPA is UAE’s first bilateral free trade agreement. It was signed on Feb. 18, ratified by UAE on March 26, and will come into force starting May 1. The two countries had agreed on an exhaustive list of products for tariff reduction. 

India, UK conclude second round of talks for proposed free trade agreement

India and the United Kingdom have concluded the second round of talks for the proposed free trade agreement (FTA), which aims at further strengthening the economic ties. For this round of negotiations, a draft treaty text was shared and discussed across most chapters that will make up the agreement. Technical experts from both sides came together for discussions in 64 separate sessions, covering 26 policy areas. The third round of negotiations is due to be hosted by India in April. 

Israel and UAE agree on ‘milestone’ free trade deal

Israel and the United Arab Emirates have concluded negotiations for a free trade agreement, Israel’s Ministry of Economy and Industry and the UAE foreign trade minister said. The UAE and Israel have between $600m and $700m in bilateral trade. The UAE and Israel formally established relations in 2020 as part of the US-brokered Abraham Accords that also included Bahrain and Morocco. The latest agreement included 95 percent of traded products, which would be customs free – immediately or gradually – including food, agriculture and cosmetic products, as well as medical equipment and medicine. The agreement included regulation, customs, services, government procurement and electronic trade and would come into effect when signed by the countries’ economy ministers and ratified, the statement said, though no timetable was given. A separate UAE statement said the agreement would substantially reduce or remove tariffs on a wide range of goods, enhance market access for services and promote investment flows. 

South Korea, Turkey seek deeper economic ties via FTA

South Korea and Turkey checked the outcome of their free trade agreement that went into effect nine years ago and discussed ways to further deepen trade and investment ties within the framework. The matter was discussed during the director-level meeting of the Korea-Turkey FTA joint committee, the fifth of its kind, which was held via teleconferencing and brought together some 20 trade officials from the two sides. Since the FTA came into force in May 2013, their trade volume has surged 58 percent from US$5.22 billion in 2012 to $8.26 billion last year. South Korea’s exports of auto parts to Turkey, a key export item, rose 25.3 percent to $396 million, and those of pharmaceutical goods grew more than sixfold to $367 million. During the meeting, the two nations also discussed pending trade issues, including Turkey’s ongoing probe into three antidumping cases involving Korean firms, including Seoul’s exports of polyester fabric. The Seoul government asked for Turkey to investigate the matter fairly by giving the companies enough opportunities to explain themselves, according to the ministry. 

UK and Canada begin formal talks for a free-trade agreement

The U.K. government announced the formal start of negotiations on a new trade deal with Canada, seeking to replace an interim deal put in place following Britain’s departure from the European Union. The U.K.-Canada trading relationship was worth over 19 billion pounds ($25.1 billion) in 2020, the U.K. trade department said in a statement. Britain is trying to secure trade deals to help make up for a decline in commerce with the EU, its biggest trading partner, since Brexit. The U.K. has agreed pacts with New Zealand and Australia, and begun talks with India. U.K. has become a less trade-intensive economy since Brexit. The government’s Office for Budget Responsibility said trade as a share of GDP fell 12% since 2019, which is 2 1/2 times more than in any other Group of Seven country. A new Canada deal is not expected to add much, since 98% of goods exports are already tariff-free under the existing agreement in place. Instead, the government hopes to cut red tape and agree new digital terms to “make trade cheaper, faster and more secure” while protecting the U.K.’s data-protection standards. The Department for International Trade is looking for greater recognition of qualifications such as architecture to boost trade in services, which already account for 48% of U.K. exports to Canada, and to loosen its relatively restrictive rules around direct investment. 

UAE, Colombia complete phase one of economic partnership agreement

The UAE and Colombia announced that they have completed phase one of their Comprehensive Economic Partnership Agreement. The Ministry of Economy said they are continuing joint efforts to reach a final draft of the agreement aimed at serving their mutual objectives. The agreement is expected to be finalised in three months. The UAE is the main trading partner of Colombia in the Arab world, with their trade exchange accounting for 40 per cent of Colombia’s trade with the region in 2020. UAE-Colombia non-oil trade was valued at Dh991 million last year. Under the partnership, the two sides expect this figure to increase three-fold in the years to come. As part of the UAE-Colombia CEPA, the two countries will also reduce or cancel customs tariffs on a wide range of goods, increase access to their markets, encourage mutual investments, create job opportunities and enlarge the scope of their cooperation in priority sectors. This includes hospitality, tourism, infrastructure, agriculture and food production.