ENHANCING EXPORTS THROUGH FTA

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ENHANCING EXPORTS THROUGH FTA

• BY
• R R PADMANABHAN
• HON ADVISER- FOREIGN TRADE
• ANDHRA CHAMBER OF COMMERCE

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WHAT IS FTA?

• FTA IS AN ARRANGMENT BETWEEN TWO OR MORE
  COUNTRIES TO REDUCE/ELIMINATE TARIFF/NONTARIFF
  BARRIERS ON GOODS/SERVICES AMONG THEMSELVES

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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

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WHY FTA/PTA?

• WTO WHICH PROMISED FREE MOVEMENT OF GOODS AND
  SERVICES REMAINS A NON STARTER

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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)

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INDIAS 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

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STATE OF FTA

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

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INDIAS 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

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

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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
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INDIAN FTAs

• CURRENTLY UNDER NEGOTIATION

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

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Case of Indo Spore FTA
2004-05 2005-06 2008-09 2009-10
501064 660408 1374435 1363877

• All figures in Indian Rupees(Crores)

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Singapores 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)     
•        

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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)
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Case of India Chile
2005-06 2006-07 2007-08 2008-09 2009-10
673.61 1698.26 1004.43 1776.77 1318.98

• All figures in Indian Rupees(crores)

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What Chile has offered?

• Agricultural Products 7
• Chemicals and Pharma53
• Dyes and resin 7
• Plastic,Rubber 14
• Leather products 12
• Textiles and clothing106
• Footwear 10
• Industrial products 82
• Others 5

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• 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

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WHAT CHILE BUYS FROM OTHERS?

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

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• 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

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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

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COMPONENTS OF FTA

• CHANGE IN HSN CODE
• ORIGIN REQUIREMENTS
• VALUE ADDITION
• DE NEMISIS
• REMOVAL OF BARRIERS
• DISPUTE SETTLEMENT MECHANISM