Economy
Gold Jewellery Exports to UAE up 42%
- 25 Aug 2022
- 9 min read
For Prelims: Types of Trade Agreements, Different forms of Trade Agreements
For Mains: India-UAE CEPA
Why in News?
India’s gold jewellery exports to the United Arab Emirates (UAE) rose by a sharp 42% in two months of a Free Trade Pact coming into effect in May 2022.
- Overall exports to the UAE in May-June, 2022 touched USD 5.4 billion, a 17% growth from a year ago.
What benefited the Growth of Jewellery Export?
- Indian exporters were facing tough competition in gold jewellery from countries like Turkey, and Indian exports were showing a decline before the FTA.
- The free trade pact came into effect in May 2022 with its offer of duty-free access on jewellery to the Gulf nation. This removal of duties has benefited exports.
- India got zero duty access to the UAE market for jewellery exports, which attracted 5% duty earlier, potentially facilitating entry of Indian products in the North Africa, West Asia and Central Asia markets.
- India in turn allowed 1% duty concession on gold imports from the UAE for up to 200 tonnes of shipments under the Comprehensive Economic Partnership Agreement (CEPA).
What will be the Benefits of India-UAE CEPA?
- Trade-in Goods:
- India will benefit from preferential market access provided by the UAE, especially for all labour-intensive sectors.
- Such as Gems and Jewellery, Textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering products, medical devices, and Automobiles.
- Trade-in Services:
- Both India and UAE have offered each other market access to the broad service sectors.
- Such as ‘business services’, ‘communication services’, ‘construction and related engineering services, ‘distribution services’, ‘educational services’, ‘environmental services’, ‘financial services, ‘health-related and social services, ‘tourism and travel-related services, ‘recreational cultural and sporting services’ and ‘transport services’.
- Trade-in Pharmaceuticals:
- Both sides have also agreed to a separate Annex on Pharmaceuticals to facilitate access to Indian pharmaceuticals products, especially automatic registration and marketing authorisation in 90 days for products meeting specified criteria.
What is CEPA?
- It is a kind of free trade pact that 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.
- Partnership agreements or cooperation agreements are more comprehensive than Free Trade Agreements.
- CEPA also looks into the regulatory aspect of trade and encompasses an agreement covering the regulatory issues.
- India has signed CEPAs with South Korea and Japan.
What are other Types of Trade Agreements?
- Free Trade Agreement (FTA):
- It is an agreement in which two or more countries agree to provide preferential trade terms, tariff concession etc. to the partner country.
- India has negotiated FTA with many countries e.g. Sri Lanka and various trading blocs as well e.g. Association of Southeast Asians Nations (ASEAN).
- Regional Comprehensive Economic Partnership (RCEP) is a Free Trade Agreement (FTA) between the ten member states of the ASEAN and the five countries (Australia, China, Japan, South Korea, and New Zealand) with which ASEAN has existing FTAs.
- Preferential Trade Agreement (PTA):
- In this type of agreement, two or more partners give preferential right of entry to certain products. This is done by reducing duties on an agreed number of tariff lines.
- Tariffs may even be reduced to zero for some products even in a PTA. India signed a PTA with Afghanistan.
- Comprehensive Economic Cooperation Agreement (CECA):
- CECA generally covers negotiation on trade tariff and TRQ (Tariff Rate Quotas) rates only. It is not as comprehensive as CEPA. India has signed CECA with Malaysia.
- Bilateral Investment Treaty (BIT):
- It is a bilateral agreement in which two countries sit together and decide the conditions for private investments by citizens and firms of the two countries.
- Trade and Investment Framework Agreement (TIFA):
- It is a trade pact between two or more countries which establishes a framework for expanding trade and resolving outstanding disputes between countries.
What are the Trade Agreements India had signed with other countries?
| S. No. | Name of the Agreement |
| 1 | India-Sri Lanka Free Trade Agreement (FTA) |
| 2 | Agreement on South Asian Free Trade Area (SAFTA) (India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan, the Maldives and Afghanistan) |
| 3 | India-Nepal Treaty of Trade |
| 4 | India-Bhutan Agreement on Trade, Commerce and Transit |
| 5 | India-Thailand FTA - Early Harvest Scheme (EHS) |
| 6 | India-Singapore Comprehensive Economic Cooperation Agreement (CECA) |
| 7 | India-ASEAN CECA - Trade in Goods, Services and Investment Agreement (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) |
| 8 | India-South Korea Comprehensive Economic Partnership Agreement (CEPA) |
| 9 | India-Japan CEPA |
| 10 | India-Malaysia CECA |
| 11 | India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA) |
| 12 | India-UAE CEPA |
| 13 | India-Australia Economic Cooperation and Trade Agreement (ECTA) |
In addition, India has signed the following 6 limited coverage Preferential Trade Agreements (PTAs):
| S.No. | Name of the Agreement |
| 1 | Asia Pacific Trade Agreement (APTA) |
| 2 | Global System of Trade Preferences (GSTP) |
| 3 | SAARC Preferential Trading Agreement (SAPTA) |
| 4 | India-Afghanistan PTA |
| 5 | India-MERCOSUR PTA |
| 6 | India-Chile PTA |
UPSC Civil Services Examination, Previous Year Questions (PYQs)
Q. The term ‘Regional Comprehensive Economic Partnership’ often appears in the news in the context of the affairs of a group of countries known as (2016)
(a) G20
(b) ASEAN
(c) SCO
(d) SAARC
Ans: (b)
Q. With reference to the ‘Trans-Pacific Partnership’, consider the following statements: (2016)
- It is an agreement among all the Pacific Rim countries except China and Russia.
- It is a strategic alliance for the purpose of maritime security only.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Ans: (d)
Exp:
- In 2005, trade agreement between a small group of Pacific Rim countries comprising Brunei, Chile, New Zealand, and Singapore led to the formation of Trans- Pacific Partnership (TPP) consisting of 12 nation states.
- TPP is an economic partnership covering elimination or reduction of tariffs, liberalization of services trade, investment rules, e-commerce guidelines, intellectual property protections, and labour and environmental standards and many other aspects of global trade. Hence, statement 2 is not correct.
- TPP includes Japan, Vietnam, Brunei, Malaysia, Singapore, Australia, New Zealand, Canada, Mexico, Peru, Chile, and the USA (withdrew from TPP in early 2018). Hence, statement 1 is not correct.
- After withdrawal of US, remaining eleven signatories, known as the TPP-11, continued talks and their efforts led to the formation of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was signed in March 2018. It has already been ratified by a majority of members and entered into force for those countries on December 30, 2018.
- Therefore, option (d) is the correct answer.
