ETIG KF Raghav1

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Information about ETIG KF Raghav1

Published on January 22, 2008

Author: Miranda


What do Home Décor Exporters need to know vis-à-vis an evolving trade regime?:  What do Home Décor Exporters need to know vis-à-vis an evolving trade regime? Raghav Narsalay Lead Economist Economic Laws Practice Mumbai & New Delhi Three dimensional system:  Three dimensional system Multilateral World Trade Organization (WTO) Regional Free Trade Agreements (only goods and services) Preferential Trade Agreements (only goods and services) Comprehensive Agreements at bilateral/regional level Comprehensive Economic Cooperation Agreements Besides agreeing to reduce barriers on trade on goods and services, it also encompasses technology cooperation, investment liberalization, intellectual property protection etc. Issues covered in the presentation:  Issues covered in the presentation SECTION ONE: RTAs RTAs and WTO RTAs and India ISLFTA and Chapter 57, 58, 60 Dimensions of Indian RTAs Important questions in the avenue of goods under RTAs Rules of Origin issues SECTION TWO: WTO Collapse of ATC Evolving regime in the EU and the US How will it impact Home Décor Exporters from India? RTAs and WTO:  RTAs and WTO Article XXIV of GATT 1947 “(4)The contracting parties recognize the desirability of increasing freedom of trade by the development, through voluntary agreements, of closer integration between the economies of the countries parties to such agreements. They also recognize that the purpose of a customs union or of a free trade area should be to facilitate trade between the constituent territories, and not to raise barriers to the trade of other contracting parties with such territories. (5)Accordingly, the provisions of this Agreement shall not prevent, as between the territories of contracting parties, the formation of a customs union or of a free trade area ...” RTAs – A phenomenon of 90s:  RTAs – A phenomenon of 90s Historical engagement of India with RTAs:  Historical engagement of India with RTAs RTAs has been a tool of economic diplomacy for India Global level: The Indo-Yugoslav-Egypt Tripartite Agreement of 1967, under which tariff concession of about 50% was available for 129 common commodities, expired on 31st March 1993 and was not renewed thereafter. Asia Pacific: India engaged with Asia Pacific countries since 1970 and finally succeeded in establishing the Bangkok Agreement in 1975 South Asia: Framework Agreement of SAPTA was signed in 1993, SAPTA came into force in 1995 RTAs notified by India:  RTAs notified by India Bangkok Agreement (notified on 16-03-1995) Bangladesh, China, India, S. Korea, Laos PDR, Sri Lanka Bhutan – India PTA (notified on 23-07-1996) Nepal – India PTA (notified on 05-11-1998) SAPTA (notified 10-08-1999) Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan AND Sri Lanka Sri Lanka – India FTA (notified on 1-3-2000) Afghanistan – India PTA (notified on 13-05-2003) Thailand – India FTA (notified on 13-08-2004) Singapore – India FTA (notified on 01-08-2005) RTAs currently being negotiated by India:  RTAs currently being negotiated by India ASEAN – India FTA MERCOSUR – India FTA SACU – India PTA SAFTA BIMSTEC Bangladesh, Bhutan, India, Myanmar, Nepal and Thailand IBSA India, Brazil, South Africa Brazil – India PTA Chile – India PTA China – India FTA Slide9:  Analysis of FTAs in Operation - India – Sri Lanka Broad elements of ISLFTA:  Broad elements of ISLFTA Signed on December 28, 1998 Establishment of a Free Trade Area through complete or phased elimination of tariffs For 1180 items in Sri Lanka's Negative List (Annexure D (ii)) there will not be any duty preference. For the remaining 2724 items by 6-digit HS Code, upon entry into force of the Agreement, tariffs will be phased out within 8 years Other than the 429 items in the Negative List of India (Annexure D (i)), 50% reduction of tariffs for the balance 2799 items, upon entry into force of the Agreement followed by phased out removal of tariffs up to 100% in 2 stages within 3 years. Tea and Garments come under a special quota regime. Review and consultation mechanisms to ensure the smooth operation of the Agreement Focus of Analysis – ISLFTA & Home Décor Products:  Focus of Analysis – ISLFTA & Home Décor Products General movement in trade under ISLFTA Trade under Chapters analyzed – Chapter 57,58,60 Why these Chapters – They cover textile categories used in home décor materials Slide12:  India – Sri Lanka trade post FTA Slide13:  Trade in Chapter 57, 58 & 60 Major elements of RTAs being signed by India:  Major elements of RTAs being signed by India They cover goods, services and investments Hence Indian government does not see them from a trade perspective only Goods Early Harvest List Normal List/List of products over which duties are eliminated in a phased manner Negative List/Sensitive List Rules of Origin Trade Remedial Measures (application of safeguards) LDC status of RTA partners Benefits of cumulation while exporting to RTAS such as the EU from the SAARC region Services Only agreement that has captured services comprehensively is Singapore-India CECA General language in other RTAs Investment and Technology Investment and Technology cooperation Step-by-step liberalization of investment regimes Chapter 57, 58 & 60 under various lists of some Indian RTAs:  Chapter 57, 58 & 60 under various lists of some Indian RTAs India – Thailand FTA – no item under EHL India – ASEAN Framework Agreement – no item under EHL INDIA – Singapore CECA All items from India are allowed to enter Singapore at zero customs duty since August 01, 2005 In the case of items being imported into India: EHL – no items from chapters mentioned above Phased elimination (100%) – 449 products in Chapter 57 – No products from Chapters 58, 60 Negative List – Tapestries (580500), Floor coverings (590490) – 50 fabric items under Chapter 60 Critical issues in the area of goods:  Critical issues in the area of goods Raw material dimension Can cheaper raw material be sourced from a country with whom India is signing or signed an RTA? Will the rules of origin requirements set by the exporting destination be satisfied after sourcing such raw material? If the cost of raw material + cost of transporting it into the unit of production is cheaper than procuring raw material in India, then does this raw material feature in the early harvest list? If not how can one get it on the early harvest list? Critical issues in the area of goods:  Critical issues in the area of goods Investment/Technology Dimension Will investing in an RTA partner help to gain some LDC benefits? What are the indirect and direct tax benefits that the LDC-RTA partner/RTA-partner in general providing? Can an RTA help to source cheaper technology that is critical to reducing the cost of manufacturing for exports? Critical issues in the area of goods:  Critical issues in the area of goods Final Product dimension – Export Perspective Will cumulation of production with an LDC (e.g. Bangladesh in SAARC) help to extract preferential market access? What are the SPS/TBT dimensions associated with the entry of the final product How much will these and other Non Tariff Barriers (NTBs) increase the cost of accessing markets? Do there exist antidumping/safeguard duties on the products being exporterd? Final Product dimension – Providing a Level Playing field Will one be facing unfair competition due to cheaper imports coming from RTA partners? Is this item included in the negative list? If this item cannot be included in the negative list, do there exist NTBs that can be applied? Slide19:  Rules of Origin Anti-Dumping Actions against existing FTA Partners:  Anti-Dumping Actions against existing FTA Partners Post the FTA with Thailand coming into effect there have been no fresh anti-dumping cases initiated against Thailand by India, and vice versa. India had imposed anti-dumping duties against 2 products exported from Nepal i.e. (Acrylic Yarn and Zinc Oxide) in 2002. Subsequently, these items were included under the list of quantitative restrictions under the Indo-Nepal Treaty of Trade, when the same was renewed in the year 2002. No anti-dumping actions lies against any products exported from Sri Lanka Conjuncture:  Conjuncture The Multi-lateral system of trading is rapidly giving way to FTAs and RTAs in the fastest growing economies of the world India is aggressively pursuing FTAs with other developing and is willing to pen FTAs with developed countries There are no special tribunals / mechanisms as in NAFTA or EU for dispute settlement provisions in the Agreements giving rights to investors Number of Trade Disputes between FTA members is reducing Slide22:  WTO regime WTO regime:  WTO regime Agreement on Textiles & Clothing has collapsed Chinese as expected are flooding international markets Yuan revaluation is expected to have a negative impact on low end Chinese goods where domestic value addition is very high (more than 60%) Stringent environmental norms being implemented in China have led to a closure of small textile units China has special deals carved out with the EU and the US during its accession to the WTO Trade in Textiles post ATC:  Trade in Textiles post ATC India’s textile exports to the US in the post quota period, i.e. after 1.1.2005. DGCIS’s data shows that India’s textile exports to US during the period January- March, 2005 were 1.33% higher than the corresponding period of previous year, The US trade data shows a growth of 8.24% in import of textiles products from India during the period January – March, 2005 vis-à-vis corresponding period of last year. Critical issues in the context of WTO regime:  Critical issues in the context of WTO regime Textiles and other home décor products such as handicrafts from textiles were under the ATC Now they will be covered under non-agricultural market access (NAMA) negotiations Question – Can we extract a preferential treatment to home décor products falling in the category of handicrafts within the evolving WTO regime? Availability of real time data on exports will be critical to address issues in the area of antidumping and safeguards Keep a vigil on the types of non-tariff barriers that could emerge within important destinations Thank you:  Thank you Raghav Narsalay

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