Preferential Trade updates 08/22

Bangladesh for securing SAFTA benefits in CEPA pact with India

Bangladesh will push for securing the benefits it enjoys under the SAFTA deal when negotiations on Comprehensive Economic Partnership Agreement (CEPA) start with India. As a least developed country (LDC) all but 25 tobacco and alcohol products of Bangladesh are entitled to duty-and quota-free market access to India under the South Asian Free Trade Area (SAFTA) agreement. Bangladesh will lose the duty-free and quota-free market-access facility to India after 2026 when it graduates to a developing country. A recent meeting at the Ministry of Commerce (MoC) decided to open CEPA negotiations with India soon with a view to retaining in the new pact the facilities it enjoys under the SAFTA deal. The meeting was told that India is a major trade partner of Bangladesh from where essential commodities, industrial raw materials and equipment are imported. 

China, Nicaragua begin talks for FTA; textile trade may get boost

China and Nicaragua are moving ahead for a comprehensive free trade agreement (FTA) and have formally established a bilateral intergovernmental economic and trade cooperation mechanism. Both the countries have begun negotiations to achieve the goal, according to China’s ministry of commerce. This may boost textile trade between the two countries. Last week, Chinese minister of commerce Wang Wentao and Nicaragua’s foreign minister Moncada, on behalf of the two governments, signed the “Arrangement between the Government of China and the Government of Nicaragua on the Early Harvest of Free Trade Agreements”, jointly announcing the launch of the China-Nicaragua comprehensive FTA negotiations.

In addition, both countries also signed the Memorandum of Understanding on the Establishment of a Mixed Committee for Economic, Trade and Investment Cooperation, formally establishing the bilateral governments’ economic and trade cooperation mechanism. The latest steps by both the governments are likely to result in increased trade, including apparel and home textiles trade, between both nations. Although the current China-Nicaragua textile and apparel trade is negligible, China has surplus trade with the Central American country. 

Colombia UK post-Brexit bilateral trade agreement goes into force

After completing government protocols, as of Tuesday, June 28, Colombia and the United Kingdom put into force the trade agreement signed in May 2019, and ratified in Colombia through Law 2067 of 2020. Minister of Commerce, Industry and Tourism, indicated that this agreement was negotiated to provide continuity between the UK and Colombia as originally agreed to within the framework of the Free Trade Agreement with the European Union, which the United Kingdom left on December 31, 2020. The tariff commitments acquired by the two countries are developed through Decree 894 of May 31, 2022. With the implementation of this agreement, Colombia has 18 active bilateral or multilateral international trade agreements in force. Between 2002 and 2021 UK based entities invested more than $22.6 billion USD in Colombia. In 2021, trade between the two countries totaled $934.5 million USD, with exports of total goods from Colombia to the UK for $451 million USD, which represented 1.1% of what the country sold globally and 10.1% of what it exported to continental Europe. These exports grew 19.6% compared to 2020. 

India customs enable TRQ holders to import gold

India customs authority has amended notification No. 22/2022-Customs, dated 30.04.2022 to enable TRQ holders to import gold through IIBX under TRQ mechanism of India-UAE CEPA. 

Korea calls for digital pact with ASEAN under FTA framework

Korea suggested a new agreement on digital technology and systems with the Association of Southeast Asian Nations (ASEAN) countries under their free trade pact in a move to further bolster bilateral economic ties, Seoul’s trade ministry said. The proposal was made during a virtual meeting of the two sides’ FTA implementation committee, which was meant to discuss ways to revise their free trade deal that was signed in 2006 and came into force the following year. Korea called for ways to work closely on new trade issues, such as supply chains and food security, as well as the revision of norms regarding goods and services trade, according to the Ministry of Trade, Industry and Energy. It also proposed the addition of a chapter on the digital sector to their FTA, which is expected to deepen trade ties and to better support Korean firms’ advance into the ASEAN market, it added. ASEAN is Korea’s second-largest trading partner, with bilateral transactions reaching $176.5 billion in 2021, nearly tripled from $61.8 billion tallied in 2006. The economic bloc comprises 10 nations ― Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam. 

Pakistan, Turkey sign Preferential Trade Agreement

Pakistan and Turkey on Friday (12^th August) signed the Preferential Trade Agreement (PTA) aimed at boosting trade in goods between the two countries. Commonly known as the Trade in Goods Pact, the PTA includes comprehensive provisions on bilateral safeguards, balance of payment exceptions, dispute settlement, and periodic review of the agreement. 

Switzerland keen on closing free trade agreement talks with India

Switzerland advocated for the quick completion of negotiations regarding the free trade agreement between the European Free Trade Association (EFTA) and India in a recent meeting held between Swiss federal councillor and Indian finance minister in New Delhi. Switzerland is a member of the EFTA along with Iceland, Liechtenstein, and Norway. Trade between India and Switzerland reached around $31.8 billion in 2021, making the former the second-biggest Asian trading partner of the latter, as per statistics released by the Swiss government. 

Turkey offers duty relief on 261 tariff lines

Turkey has offered concessions on 261 tariff lines to Pakistan under the Trade in Goods Agreement with the objective of achieving annual bilateral trade value of $5 billion. The development came in the wake of Prime Minister visit to Turkey about two months ago. Pakistan and Turkey had been in talks for the past several years to ink a trade agreement, but Turkish businessmen were not in favour of the move. Now, Ankara has offered concessions to Islamabad on 261 tariff lines, which include key items of Pakistan’s export interest from both the agriculture and industrial sectors. Officials of the commerce ministry said tariff concessions on those items would provide Pakistan’s exporters with better market access compared to major competitors such as India, China, Vietnam and Malaysia. Of the 261 tariff lines, Turkey has offered immediate zero duties on around 123 tariff lines (customs duty on agricultural products and additional customs duty on industrial products). However, for 92 tariff lines, the duties will be reduced to zero over a period of 5-10 years. In the case of five tariff lines, Ankara is offering 50% reduction in duties, whereas for 14 tariff lines, it is offering tariff rate quota. In response, Pakistan has offered to Turkey concessions on 130 tariff lines. Of these, Islamabad is offering immediate zero duties on only 16 tariff lines and for another 16 tariff lines, the duties will be slashed to zero over a period of 5-10 years. 

UAE, Kenya to commence talks over comprehensive economic partnership

The Minister of State for Foreign Trade of Abu Dhabi, and Cabinet Secretary, Ministry of Industrialization, Trade and Enterprise Development of Kenya, signed a Joint Statement in Nairobi announcing the intention to begin negotiations towards a Comprehensive Economic Partnership Agreement (CEPA) between the UAE and Kenya. The UAE-Kenya CEPA will be the first bilateral trade deal that the UAE seeks to sign with an African nation. Such an agreement will deepen trade and investment ties between Africa and the Middle East and boost the total value of UAE-Kenya non-oil bilateral trade, which grew to US$ 2.3 billion last year.

Through the CEPA, the UAE and Kenya aim to remove trade barriers on a wide range of goods and services, creating new opportunities for imports and exporters in both countries, and enabling Kenyan companies to leverage the value of the UAE’s geographic and logistical position. 

Vietnam, Israel make progress in FTA negotiations

Vietnam and Israel have made progress during the recently eleventh round of negotiations on a free trade agreement (FTA) between the two countries. Opening the market, customs and trade facilitation, government procurement, services and investments and other legal and institutional issues were tabled at the eleventh round that took place in Israel on June 1-5. The two sides agreed on many important contents, especially those related to opening markets to each other. They pledged to accelerate discussions in the coming time to soon conclude the negotiating process. The FTA is expected to further boost trade and investment between the two countries as well as bring substantial benefits to enterprises, and citizens of both nations. Vietnam and Israel officially launched FTA negotiations on December 2, 2015.