India and the United Arab Emirates will sign the first-ever bilateral Free Trade Agreement between the two countries.
What is CEPA?
- The partnership agreement or cooperation agreement is more comprehensive than an FTA.
- CECA/CEPA also looks into the regulatory aspect of trade and encompasses an agreement covering the regulatory issues.
- CECA has the widest coverage. CEPA covers negotiation on the trade in services and investment and other areas of economic partnership.
- It may even consider negotiation in areas such as trade facilitation and customs cooperation, competition, and IPR.
- India has signed CEPAs with South Korea and Japan.
What is a Free Trade Agreement (FTA)?
- An FTA is a pact between two or more nations to reduce barriers to imports and exports among them.
- Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
- The concept of free trade is the opposite of trade protectionism or economic isolationism.
Key benefits offered by FTA
- Reduction or elimination of tariffs on qualified: For example, a country that normally charges a tariff of 12% of the value of the incoming product will rationalize or eliminate that tariff.
- Intellectual Property Protection: Protection and enforcement of intellectual property rights in the FTA partner country is upheld.
- Product Standards: FTA enhances the ability for domestic exporters to participate in the development of product standards in the FTA partner country.
- Fair treatment for investors: FTA provides treatment as favorably as the FTA partner country gives equal treatment for investments from the partner country.
- Elimination of monopolies: With FTAs, global monopolies are eliminated due to increased competition.
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