How is CEPA/CECA different from FTA?

 A Comprehensive Economic Partnership Agreement (CEPA) or Comprehensive Economic Cooperation Agreement (CECA) is different from a traditional Free Trade Agreement (FTA) in two ways.

Firstly, CEPA or CECA are more comprehensive and ambitious than an FTA in terms of coverage of areas and the type of commitments. While a traditional FTA focuses mainly on goods, a CECA/CEPA is more ambitious in terms of a holistic coverage of many areas like services, investment, competition, government procurement, disputes, etc.

Secondly, CEPA/CECA looks deeper at the regulatory aspects of trade than an FTA. It encompasses mutual recognition agreements that cover the regulatory regimes of the partners, recognizing different regulatory regimes of partners on the presumption that they achieve the same objectives.

Why are almost all countries signing FTAs?

 Countries negotiate Free Trade Agreements for several reasons:

1. By eliminating tariffs and some non-tariff barriers, Free Trade Agreement partners get easier market access into each other’s markets.
2. Exporters prefer FTAs to multilateral trade liberalization because they get preferential treatment over non-FTA member country competitors. For instance, in the case of ASEAN, ASEAN has an FTA with India but not with Canada. ASEAN’s customs duty on leather shoes is 20%, but under the FTAs with India, it reduces duties to zero. This duty preference makes an Indian exporter more competitive than a Canadian exporter of shoes, assuming other costs are equal. FTAs may also protect local exporters from losing out to foreign companies that might receive preferential treatment under other FTAs.
3. Possibility of increased foreign investment from outside the FTA. For example, consider two countries, A and B, having an FTA. If country A has a high tariff and a large domestic market, firms based in country C may decide to invest in country A to cater to A’s domestic market. However, once A and B sign an FTA and B offers a better business environment, C may decide to locate its plant in B to supply its products to A.

India’s Global Positioning in Bilateral FTAs/PTAs/CEPAs/CECAs India has preferential access, economic cooperation, and Free Trade Agreements (FTAs) with about 54 individual countries. India has signed bilateral trade deals in the form of Comprehensive Economic Cooperation Agreement (CECA)/Comprehensive Economic Partnership Agreement (CEPA)/Free Trade Agreement (FTA)/Preferential Trade Agreements (PTAs) with approximately 18 countries. India is a late and cautious starter in concluding comprehensive PTAs covering substantially all trade with some of its trading partners.

Rules of Origin (ROO) Country of origin/Rules of Origin (ROO) are the criteria needed to determine a product for purposes of international trade. Their significance is derived from the fact that duties and restrictions in several cases depend upon the source of imports. ROO are used to implement measures and instruments of commercial policy such as anti-dumping duties and safeguard measures; to determine whether imported products shall receive most-favored-nation (MFN) treatment or preferential treatment; for the purpose of trade statistics; for the application of labeling and marking requirements; and for government procurement.

Authorized Agencies in India for Issuing Certificate of Origin The authorized agencies in India for issuing the certificate of origin are listed in Appendix 35 of the Handbook of Procedures Vol-1 under the Foreign Trade Policy. These agencies include the Export Inspection Council (EIC), Export Development Authorities, Development Commissioners of EPZs and SEZs, and FIEO.

Methods of Supply under Trade in Services The four methods of supply in trade in services are:

1. Cross-border supply (supply from the territory of one party into the territory of the other party).
2. Consumption abroad (consumption in the territory of one party by the service consumer of the other party).
3. Commercial presence (by a service supplier of one party, through commercial presence in the territory of the other party).
4. Presence/movement of natural persons (by a service supplier of one party, through the presence of natural persons of one party in the territory of the other party).

GATS covers only temporary movement and not citizenship, residence, or employment on a permanent basis in the foreign country.