Preferential Trade updates 05/22

Cambodia, India mulling free trade pact establishment

Cambodia and India have accelerated their internal technical work to establish the negotiation for a bilateral free trade agreement, stressing that the pact would enhance trade, investment, and cooperation in other sectors. Both sides emphasised the need for cooperation in investment, trade, culture, and tourism sectors in the meeting. Mr Hun Sen asked the Indian side to accelerate the internal technical work for the possibility of an FTA negotiation and accelerate the negotiation to finish the draft of the bilateral investment treaty between Cambodia and India. The two-way trade between Cambodia and India decreased to $300 million in 2021 due to the adverse impact of the Covid-19 pandemic. Cambodia has formed a working group to study the potential and possibility of the establishment of FTA negotiation with India, according to the Ministry of Commerce. 

EU wants to sign stalled trade agreements, but with Mercosur objections persist

The European Union aims to finalize and sign at least three stalled trade agreements this year as the bloc looks to reinforce strategic alliances amid the turmoil caused by Russia’s invasion of Ukraine. The European Commission expects to conclude negotiations with Chile, New Zealand and Australia by the end of 2022 after progress had been stalled for months. The Commission, which is the EU’s executive arm, will also try to finalize legal texts to ratify agreements already struck with Mexico and the South American trade bloc Mercosur. Discussions are expected to be concluded next year. The trade offensive takes place amid the geopolitical fallout from Russia’s attack on its neighbor, prompting the 27-member EU to cement ties with allies including the U.S. and leveraging a market of 450 million people. 

India, Canada look to expedite FTA negotiations

India and Canada held the fifth Ministerial Dialogue on Trade & Investment (MDTI) and formally agreed to expedite talks to consider a free trade agreement between the two countries to boost trade in goods and services along with an early harvest deal. Union commerce and industries minister Goyal and his Canadian counterpart had earlier agreed to formally relaunch negotiations for the India-Canada Comprehensive Economic Partnership Agreement (CEPA) and also to consider an interim agreement or Early Progress Trade Agreement (EPTA) that expedites mutual commercial gains. 

India - UAE trade pact comes into force

The free trade agreement between India and the UAE has come into effect, under which domestic exporters in various sectors like textiles, agriculture, dry fruits, gems and jewellery will get duty-free access to the UAE market. In a symbolic gesture for operationalising the agreement, Commerce Secretary BVR Subrahmanyam handed over Certificates of Origin to three exporters from the gems and jewellery sector. These consignments to Dubai will not attract any customs duty under the pact, which is officially termed as Comprehensive Economic Partnership Agreement (CEPA). The Central Board of Indirect Taxes and Customs (CBIC) and the Directorate General of Foreign Trade (DGFT) has issued relevant notifications for the operationalisation of the agreement from May 1. The UAE is the second or third largest trading partner of India and that country is a gateway to the middle east, North Africa, Central Asia and sub-Saharan Africa. The trade pact will help in taking the two-way trade to USD 100 billion in five years from the existing $60 billion. Overall, India will benefit from preferential market access provided by the UAE on over 97 per cent of its tariff lines (or goods), which account for 99 per cent of Indian exports to the UAE in value terms — particularly from labour-intensive sectors such as textiles, leather, footwear, sports goods, plastics, furniture, and engineering products. Underscoring the need for Indian products to be competitive in the international market, the secretary said that there was a need to build and augment domestic capacities. 

India - UK conclude third round of FTA talks

India and the UK concluded the third round of talks for the proposed free trade agreement covering ground on key areas. The two sides hope to sign the interim deal by October. The third round of talks were to focus on issues, including tariff concessions on alcoholic beverages, movement of professionals, among other things. India and the UK had covered significant ground in the last two rounds with the UK agreeing to eliminate duty on rice and textile goods, while India is likely to allow duty-free entry of British apples, UK-manufactured medical devices, and machinery. The interim or the early harvest agreement pact aims to cover 65% of goods and up to 40% of services, with the coverage in goods expected to go up to 90% in the full agreement. The agreement is estimated to double India-UK bilateral trade to about $100 billion by 2030. An agreement is also expected on mutual recognition of higher education qualifications, another person aware of the development said. 

Japan, Africa look to deepen trade ties

Japan is looking to expand its presence on the African continent, with trade and investment taking center stage during the Japan-Africa Public-Private Economic Forum held in Nairobi. The event attracted seven ministerial-level leaders and over 200 participants from 15 countries, according to the Kenyan trade ministry. Among them was Takako Suzuki, a Japanese state minister of foreign affairs who attended the event while on an African tour that also took her to Rwanda. 

New Zealand challenges Canada dairy tariffs under CPTPP

Canada’s dairy tariff rate quotas (TRQs) set out how much dairy product can cross its border tariff-free.
Trade Minister New Zealand had submitted a request for consultations under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement both countries - and 10 others - are signatories to. It is the first time such a dispute settlement has been sought by any country under the CPTPP. 

Singapore and the Pacific Alliance ink agreement to strengthen economic ties

Singapore strengthened its economic ties with the Pacific Alliance (PA) with the signing of the PA-Singapore Joint Work Plan for Collaboration in Mexico. Minister of State for Trade and Industry Alvin Tan signed the agreement with Mexico’s Secretary of Foreign Affairs Marcelo Ebrard. Mexico currently holds the rotating presidency of the PA, which consists of Chile, Colombia, Mexico and Peru. Taken together, the bloc has a combined gross domestic product (GDP) that makes it the eighth-largest economy in the world. The agreement sets out initiatives of mutual interest for Singapore and the PA to work on, with target milestones and timelines to be achieved. Among the areas for collaboration are the digital economy, technology and innovation, including in fintech and electronic payments. Green energy and sustainability is another area identified for partnership, such as in low-carbon technologies like hydrogen and carbon capture. Other areas include connectivity, logistics and trade facilitation, as well as business and people links. 

Ukraine, UK sign preferential trade deal; abolish import duty, tariff quota

Ukraine and the UK have signed an agreement on the abolition of import duties and tariff quotas. The preferential trade agreement, which will be in place for 12 months, is set to boost the exports of high value-added goods from Ukraine, including flour, grain, dairy products, poultry, tomato paste, honey, corn, wheat, juices, mushrooms and sugar.  Last month, the European Union decided to abolish tariffs and quotas on Ukrainian industrial goods and foods. 

Ukraine, Moldova to renew FTA agreement

Ukraine and the Republic of Moldova will renew a Free Trade Area (FTA) agreement despite the war. In his words, the draft law on the application of Pan-Euro-Mediterranean rules of origin has already been submitted to Parliament.