NEW DELHI(PTI):India and South Korea will review their Free Trade Agreement (FTA) on Saturday with a view to strengthening it further.
Both the countries implemented the Comprehensive Economic Partnership Agreement (CEPA) in January 2010, under which the two nations liberalised trade norms for each other.
Commerce and Industry Minister Nirmala Sitharaman said both the countries should do everything to further strengthen the CEPA and will deliberate on various aspects of the pact.
“We hope to do an intensive exercise so that it can be concluded in the favour of both the countries. It will require quite a few assessments of the benefits derived from both the countries under the existing CEPA,” she said.
She was speaking at a function organised jointly by Korea Trade-Investment Promotion Agency and industry chamber FICCI.
Korean Minister for Trade, Industry and Energy Hyunghwan Joo said that both sides should enhance their institutional foundations of trade and investments “most notably by upgrading the CEPA.”
Since the implementation of the pact, volumes of bilateral trade has increased significantly, he said.
However, he added that “our current CEPA suffers (because) of low utilisation rate due to complex rules of origin and low level of concessions.”
These remarks assumes significance as South Korea, with which India had trade deficit of about $10 billion in 2015-16, has sought widening of the scope of FTA by including more products such as machinery and certain kinds of steel products under the pact.
Upgrading of a free trade pact involves reopening of the agreement and fresh negotiations with regard to duty-free access of the new products. Under the FTA, duties on most of the products traded between the countries are either eliminated or reduced sharply.
Industry has already demanded that steel products should be excluded from the ambit of FTA with Japan and Korea as these countries are flooding the Indian market, taking advantage of concessional duty rates at the cost of domestic firms.
The Korean Minister said that from their side only 62 per cent of Korean exports to India are enjoying the benefits of CEPA. “I hope to see more Koreans and Indian companies taking advantage of CEPA,” he said.
Mr. Hyunghwan said he hoped that both the sides would work on streamlining the rules of origin norms.
He said that Indian companies should invest in Korea as they can get access to Chinese market with which it has a Free Trade Agreement.
The bilateral trade between the countries stood at $16.59 billion in 2015-16. The trade is highly in favour of Korea.