More trade concessions likely for Mercosur bloc
Business Standard
More trade concessions likely for Mercosur bloc
Siddharth Zarabi & Rituparna Bhuyan / New Delhi February 05, 2007
India may expand the list of items on which it will offer concessional imports to the Mercosur trading bloc (Brazil, Argentina, Uruguay, Paraguay, Chile and Bolivia) to 2,549, while also offering a 20 per cent concession on basic import duty on items in this list.
Earlier, the Mercosur bloc had offered tariff concessions on 452 items, while India matched the list with 450 items.
According to the commerce ministry, the Mercosur bloc is the fourth largest integrated market after the European Union (EU), North American Free Trade Agreement (NAFTA) and Asean(Association of South East Asian Nations). Indian exports to Mercosur in 2003-04 stood at $ 566.96 million, while imports stood at $ 849.69 million.
The ministry has proposed this enhanced list of items and the lower duty to other government ministries and departments. A decision is expected once the ministries approve the plan.
The proposed move is significant and comes in the backdrop of a framework agreement signed between India and the Mercosur nations on June 17, 2003. The aim of the agreement was to have a free trade area in conformity with the World Trade Organisation (WTO) norms.
Subsequently, a preferential trade agreement (PTA) was signed by both the parties on January 25, 2004. This agreement was aimed at strengthening existing relations and promoting expansion of trade with reciprocal fixed tariff preferences, with the ultimate objective of creating a free trade area.
As a consequence of the reciprocity clause, Mercosur is also expected to give a similar list of items on which it will offer Indian imports concessional rates of duty.
“The offer to enhance the list is a positive movement in the direction of setting up of the FTA between both the parties. As the PTA is based on reciprocity, India could also expect a similar offer list from the Mercosur bloc,” said TS Vishwanath, who heads CII’s international trade policy division.
Indian exports to Mercosur include drugs, pharmaceuticals and fine chemicals, transport equipment, chemicals (inorganic, organic, agro), cotton yarn and manmade fabrics, readymade garments, dyes, intermediates and coal tar.
The Latin American trade bloc primarily exports edible oils (mainly soya), metalliferous ores, metal scrap and non-electrical machinery to India. India has signed similar PTAs with Afghanistan and Chile. It has also signed FTA with Thailand and comprehensive economic cooperation agreement (CECA) with Singapore. It is in advanced negotiations for FTAs with the Asean and Korea.
Similar pacts are being discussed with Japan and formal negotiations with China, the European Union and Australia are expected to begin soon.
THE FACTFILE
– Mercosur is South America’s leading trading bloc
– The bloc comprises Argentina, Brazil, Paraguay, Uruguay, Venezuela, Bolivia, Chile, Colombia, Ecuador and Peru
– Mercosur bloc is the fourth largest integrated market after the European Union, North American Free Trade Agreement and Association of South-East Asian Nations
– The bloc’s combined market encompasses more than 250 million people and accounts for more than three-quarters of the economic activity in South America
– The Mercosur bloc primarily exports edible oils (mainly soya), metalliferous ores, metal scrap and non-electrical machinery to India
– Indian exports to Mercosur include drugs, pharmaceuticals and fine chemicals, transport equipment, chemicals (inorganic, organic and agro), cotton yarn and man-made fabrics, readymade garments, dyes, intermediates and coal tar
– Indian exports to Mercosur in 2003-04 stood at $566.96 million, while imports stood at $849.69 million
