Slide 1

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

Slide 20

India's Export to Korea HS 2 DigitHS 6 DigitTariff rates in Korea Korea's Schedule of tariff concessions 127 (Mineral Fuel, Oil, etc)271011 (Light Oil, Preps (Not Crude))5RED 229 (Organic Chemicals)290124 (Buta-1,3-Diene and Isoprene)0E-0 326 (Ores, Slag, Ash)262030 (Mainly Containing Cooper)2E-0 452 (Cotton + Yarn, Fabric)520523 (Single Yarn, Combed, 43-52Nm)8EXC 572 (Iron & Steel)720241 (Chromium >4% Carbon)3E-0 671 (Precious Stones, Metals)711299 (Waste And Scrap of Precious metals)2E-0 784 (Machinery)840999 (Spark-ignition Parts)5E-0 823 (Food Waste; Animal Feed)230649 (Rape/Colza Seed Oilcake)0E-0 976 (Aluminum)760110 (Not Alloy)3E-0 1079 (Zinc + Articles Thereof)790111 (N Al=>99.99% Zinc Weight)5E-0 1132 (Tanning, Dye, Paint, Putty)320417 (Pigments & Preparations)8E-5 1285 (Electrical Electrodes)854511 (Furnace Carbon Electrode)5E-0 1324 (Tobacco)240120 (Stemmed/Stripped)20EXC 1412 (Misc Grain, Seed, Fruit)120740 (Sesame Seed)630% or 6660/kg EXC 1538 (Misc Chemical Products)380891 (Insecticides, In Forms)6.5E-0 1678 (Lead)780199 (Other Non Refined)5E-0 1741 (Hides & Skins)411410 (CHAMOIS Leather Prep Tan/Crust )5E-5 1887 (Vehicles, Not Railway)870899 (Other 8708)8E-0 1973 (Iron/Steel Products)730490 (Other 7304)0E-0 2003 (Fish & Seafood)030379 (Other 0303)10 to 63E-8 & EXC at 8th HS level

Slide 21

Slide 22

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