ENHANCING EXPORTS THROUGH FTA

BYR R PADMANABHAN

HON ADVISER- FOREIGN TRADEANDHRA CHAMBER OF COMMERCE

WHAT IS FTA?

FTA IS AN ARRANGMENT BETWEEN TWO OR MORE COUNTRIES TO REDUCE/ELIMINATE

TARIFF/NONTARIFF BARRIERS ON GOODS/SERVICES AMONG THEMSELVES

WHAT IS PTA?

TWO OR MORE PARTIES AGREE TO REDUCE TARIFFS ON AGREED NO OF

TARIFF LINES. THE LIST OF PRODUCTS IS CALLED POSITIVE LIST

WHY FTA/PTA?

WTO – WHICH PROMISED FREE MOVEMENT OF GOODS AND

SERVICES REMAINS A NON STARTER

PRESENT SCENARIO OF WORLD TRADE

WORLD TRADE 100%SHARE OF WTO MEMBERS 94%

TRADE BY ALL GROUPINGS AS% OF WORLD TRADE 72(SOURCE: INTERNATIONAL TRADE STATISTSICS)

INDIA’S LARGEST TRADING PARTNERS –Rs.in crores

%Share

1 U ARAB EMTS

110,229.08

113,327.23

2.81 13.41

2 U S A 96,458.42

92,386.34

-4.22 10.93

3 CHINA P RP

42,661.33

54,705.80

28.23 6.47

4 HONG KONG

30,390.69

37,297.85

22.73 4.41

5 SINGAPORE

37,756.88

35,837.68

-5.08 4.24

Total

840,755.05

845,125.20

0.52 100

STATE OF FTA

ANY REGIONAL GROUPINGS IS ALWAYS WTO PLUS

SIMILARLY ANY FTA/PTA IS ALWAYS WTO PLUS AND REGIONAL GROUPINGS

PLUS

INDIA’S FTAs

INDIAN FTAs ARE PARTLY DUE TO RECOGNITION THAT IT SHOULD NOT BE

LEFT BEHIND OTHER TRADE POWERS MOST NOTABLY CHINA. CHINA IS AHEAD OF US IN

MANY INDICES

• FTAs IN OPERATION• Agreement on Economic Cooperation between

India and Finland • Agreement on South Asia Free Trade Area • Asia Pacific Trade Agreement APTA • CECA between The Republic of India and the R

epublic of Singapore • Global System of Trade Preferences GSTP• India Chile PTA • India Afghanistan PTA • India ASEAN Agreements • India Bhutan Trade Agreement

FTA s IN OPERATION

India Bhutan Trade Agreement India Korea CEPA India MERCOSUR PTA India Nepal Trade Treaty India Sri Lanka FTA SAARC Agreement on Trade in Services

INDIAN FTAs

• CURRENTLY UNDER NEGOTIATION

• INDIA CHINA• INDIA AUSTRALIA• INDIA INDONESIA• INDIA NEW ZEALAND

Case of Indo Spore FTA2004-05 2005-06 2008-09 2009-10

501064 660408 1374435 1363877

• All figures in Indian Rupees(Crores)

Singapore’s FTAs• ASEAN Free Trade Area • ASEAN-Australia-New Zealand FTA• ASEAN-China (ACFTA) • ASEAN-India (AIFTA) • ASEAN-Japan (AJCEP) • ASEAN-Korea (AKFTA) • Australia (SAFTA) • China (CSFTA) • Hashemite Kingdom of Jordan(SJFTA) •

India (CECA)           Japan (JSEPA)          Korea (KSFTA)    New Zealand (ANZSCEP)   Panama (PSFTA)  Peru (PeSFTA)   Switzerland, Liechtenstein, Norway and Iceland (ESFTA)                 Trans-Pacific SEP (Brunei, New Zealand, Chile, Singapore)  United States (USSFTA)

Case of India – Chile

• All figures in Indian Rupees(crores)

2005-06

2006-07

2007-08

2008-09

2009-10

673.61

1698.26

1004.43

1776.77

1318.98

What Chile has offered?

Agricultural Products 7 Chemicals and Pharma53

Dyes and resin 7Plastic,Rubber 14

Leather products 12Textiles and clothing106

Footwear 10Industrial products 82

Others 5

• agriculture products (7 tariff lines), 20%• chemicals and pharmaceuticals (53 tariff lines), 20-

50%• dyes and resins (7 tariff lines), 20%• plastic, rubber and miscellaneous chemicals (14

tariff lines)20-100 • Sheath contraceptives 100% 4014.10.00 • leather products (12 tariff lines) • , textiles and clothing (106 tariff lines)• , footwear (10 tariff lines),• some industrial products (82 tariff lines)• some other products (5 tariff lines).• 9018.32.00 tubular needles 100%

WHAT CHILE BUYS FROM OTHERS?

• petroleum and petroleum products, chemicals, electrical and telecommunications equipment, industrial machinery, vehicles, natural gas

• IF YOUR PRODUCT IS IN THE CATEGORY OF WHAT CHILE BUYS FROM OTHERS AND IF IT IS COVERED UNDER FTA WITH INDIA, THEN YOU CAN ENTER THE MARKET. OF COURSE, SUBJECT OTHERS THINGS REMAINING EQUAL

LEVIS EXAMPLE

• YARN FROM CAMBODIA• DYED AND SPUN IN TAIWAN• CUTTING AND STITCHED IN BANGLADESH• EXPORTED TO US AND EUROPEAN MARKETS• THE WHOLE PROCESS COORDINATED FROM

HONGKONG

COMPONENTS OF FTA

CHANGE IN HSN CODEORIGIN REQUIREMENTS

VALUE ADDITIONDE NEMISIS

REMOVAL OF BARRIERSDISPUTE SETTLEMENT MECHANISM