Tamanna Chaturvedi Consultant Indian Institute of Foreign Trade
Strategy to enhance RTA utilization amongst SMEs by understanding
its Business Implications
Slide 2
How is RTA better than WTO? Can these RTAs that my country has
signed help my business grow?
Slide 3
RTA provide member countries with a comprehensive legal
framework to provide greater market access for goods and services.
Negotiations are certainly faster. It allows countries to develop
partnerships in areas not covered by WTO. Going beyond WTO
Slide 4
Slide 5
Partner Countries Type of Agreement China- Japan- South Korea
Free Trade Agreement India-ChilePreferential Trading Agreement
ASEAN-China Comprehensive Economic Co- operation Agreement (CEPA)
ASEAN- Japan/South Korea Comprehensive Economic Partnership
Agreement (CEPA) India-MauritiusCECPA India-NepalTreaty of
Trade
Slide 6
Economic Co-operation in identified sectors Institutional
framework to enable environment for greater flow of investments
SPS-TBT considerations MRA on standards, mutual recognition,
assessment procedures, equivalence MOU on harmonization on
Ayurvedic/traditional medicines Custom clearance agreement Consumer
Protection and legal meteorology Trade defense measures Double
taxation Avoidance Convention (DTAC) Bilateral Investment Promotion
& Protection Agreement (BIPA) Treatment of Shell Companies Air
services agreement & open skies for charter flights Health
care, education, media, tourism Unauthorized trade Govn
procurement, IPRs & GIs Dispute Settlement process
Slide 7
Slide 8
Stages of an Regional Trading Arrangement Monetary Union
Economic Union Common Market Custom Unions Free Trade Areas
Preferential Trading Arrangement CET Free movement of factors of
production Macroeconomic policy coordination Common currency
Slide 9
Up gradation from PTA to FTA: COMESA The Common Market for
Eastern and Southern Africa, is an FTA with twenty member states
stretching from Libya to Zimbabwe. COMESA formed in December 1994,
replacing a Preferential Trade Area which had existed since
1981.LibyaZimbabwe
Slide 10
Up gradation from Customs Union to Monetary Union: case of
UDEAC The Customs and Economic Union of Central Africa UDEAC formed
a customs union with free trade area between members and a common
external tariff for imports from other countries. customs unionfree
trade areacommon external tariff The Economic and Monetary
Community of Central Africa ( CEMAC) is an organization of states
of Central Africa established by Cameroon, Central African
Republic, Chad, Republic of Congo, Equatorial Guinea and Gabon to
promote economic integration among countries that share a common
currency, the CFA franc.Central AfricaCameroon Central African
RepublicChadRepublic of CongoEquatorial GuineaGaboneconomic
integrationCFA franc Currently, CEMAC countries share a common
financial, regulatory, and legal structure, and maintain a common
external tariff on imports from non-CEMAC countries. Movement of
capital within CEMAC is free.
Slide 11
Up gradation from Common Market to CSME: Caribbean Single
Market and Economy : learning for ASEAN
Slide 12
Participants exercise What steps your country should take to
integrate from FTA to Economic Union?
Slide 13
Learning for ASEAN: steps towards Economic Integration The
outline of the Development Vision and the Regional Development
Strategy The extension of categories of free movement of labour and
the streamlining of existing procedures, including contingent
rights Full implementation of free movement of service providers,
with streamlined procedures Implementation of Legal status (i.e.
legal entrenchment) for the CARICOM Charter for Civil Society
Establishment and commencement of operations of the Regional
Development Fund Approval of the CARICOM Investment Regime and
CARICOM Financial Services Agreement, to come into effect by
January 1, 2009 Establishment of the Regional Stock
ExchangeRegional Stock Exchange
Slide 14
Learning for ASEAN: steps towards Economic Integration
Negotiation and political approval of the Protocol on Enhanced
Monetary Cooperation Agreement among Central Banks on common
CARICOM currency. Harmonization of taxation systems, incentives and
the financial and regulatory environment Implementation of common
policies in agriculture, energy-related industries, transport,
small and medium enterprises, sustainable tourism and agro-tourism
Implementation of the Regional Competition Policy and Regional
Intellectual Property Regime Harmonization of fiscal and monetary
policies Implementation of a CARICOM Monetary Union.
Slide 15
Efforts to promote integration of CLMV into ASEAN as AEC
Formation of ASEAN development fund: In order to narrow the
development gap within ASEAN, the ASEAN Development Fund which
could advance the development of ASEAN-CLMV countries was signed on
26 July 2005. Initiative for ASEAN Integration (IAI): In the IAI,
signed on 23 July 2001, the member countries declared to take
special efforts to help the development of ASEAN-CLMV with priority
given to infrastructure, human resource development and ICT.
However, an integrated approach should be developed to widen
transport linkages to narrow the development gaps. Roadmap for the
Integration of ASEAN (RIA): The RIA specifies milestones including
specific steps and timetables. In 2003, the AEM identified 11
priority sectors, chosen for their comparative advantage, for
accelerated economic integration. A twelfth sector, logistics, was
added in 2006. Member states took on the coordination role for each
of the 12 sectors.
Slide 16
Priority SectorCo-odinator Agro based products &
FisheriesMyanmar Air Travel & TourismThailand Automotives &
wood based productsIndonesia e-ASEAN & Health careSingapore
ElectronicsPhilippines LogisticsVietnam Rubber, textiles &
apparelsMalaysia Source: ASEAN Secretariat
Slide 17
Stages of Economic Integration around the World
Slide 18
Slide 19
E-0 Tariff will be entirely eliminated on the date the
agreement enters into force (January 01, 2010) E-5 Tariff will be
removed in 5 equal annual stages beginning on the date the
agreement enters into force, effective January 1 of the year* four
E-8 Tariff will be removed in 8 equal annual stages beginning on
the date the agreement enters into force, effective January 1 of
the year* seven RED Tariff will be reduced to 1 5 % from the base
rate (2006) in 8 equal annual stages beginning on the date the
agreement enters into force, effective January 1 of the year seven
SEN Tariff will be reduced by 50% of the base rate (2006) in 8
equal annual stages for India and 10 annual stages for Korea on the
date the agreement enters into force, effective January 1 of the
year seven (for Korea) and year nine (for India) EXCTariff is
exempted from the obligation of tariff reduction or elimination
CEPA: Tariff Elimination on goods
Duty Concessions for Sri Lankan Exports to India Tariff
Reductio n Remarks 50% To be made duty free from 2004 50%-Tea 50%
fixed tariff concession for imports of tea from Sri Lanka (Annual
maximum quota of 15 million Kilograms) 50%- Garment s Garments
covering Chapters 61 & 62 while remaining in the negative list,
will be given 50 percent tariff concessions on a fixed basis,
subject to an annual restriction of eight million pieces, of which
six million shall be extended the concession only if made of Indian
fabric. On utilization of the unrestricted quota, an additional
quota of 2 million pieces out of 8 million pieces is permitted. The
quota level per category is increased from 1.5 million to 2 million
pieces per category per year. 25%- Textiles Concessions of Textile
items restricted to 25 percent on Chapters 51-56, 58-60, & 63.
Four Chapters under the Textile sector retained in the negative
list (Chapters 50, 57, 61, and 62) The Rules of Origin (RoO)
criteria have also been defined under ISLFTA. The preferential
duties will be applicable only if the domestic value-addition is at
a minimum of 35 percent or 25 percent when Indian inputs comprise
10 percent.
Slide 23
Understanding consumer demands while negotiations Rice from Lao
PDRVietnamese RiceThai rice As a foreign buyer, can you make out a
difference?
Slide 24
Understanding Consumer Specificity
Slide 25
Mango season overlaps Christmas. During this season, mangoes
are eaten for breakfast and first box of mangoes is auctioned for
charity. Unripe mangoes eaten with bagoong Mangoes used to make
juices, icecream,fruit bars, pies,stick dipped in hot chili powder
and salt Mangoes eaten green with salt & pepper.. In gautemala
they eat with roasted pumpkin seed Understanding Consumer
Specificity
Slide 26
Understanding consumer demands while negotiations EU self suff
in apples and grapes Import demand for mangoes, banana, avocadoes,
pineapple & kiwi Northern EU consume less fruits and vegetables
than Southern EU Change in production system have changed demand
patterns Consumption in new EU states < old EU member countries
Southern EU still prefers fresh and unprocessed fruits and veg.
Weight loss products, gluten free in demand Cross varietal products
in demand Demand for organic products is on high
Slide 27
Understanding specificity of Consumer demands EU is large
producer of fruit juice but limited producer of fruit juice
concentrate. Fruit juice processing (Germany, UK) Orange conc
(Italy, Spain & Greece)+USA+Brazil Lemon conc (Italy) Apple
conc (Poland, Italy, Germany, Hungary & Spain) Consumption of
preserved fruits and vegetables: canned, frozen, jams and purees
increased by 7%.Dried grapes, dates, prunes and apricots
consumption on rise.(Italy, UK and Germany)
Slide 28
Customization of the Product
Slide 29
Proper Competition Analysis..not all producers are my
competitors Seasonal calendar for the production of mangoes
throughout the world