Minister for Trade Kim Jong-hoon and Commerce Minister of India Anand Sharma signed the Korea-India Comprehensive Economic Partnership Agreement (CEPA) in Seoul on August 7, 2009.
※ Comprehensive Economic Partnership Agreement (CEPA): The term was adopted to emphasize the
comprehensive nature of the economic relationship that covers the trade of goods and services, investment and economic cooperation which is substantially the same as an FTA.
Negotiations for the Korea-India CEPA were launched in March 2006. Korea and India reached an agreement on the final version of the agreement at the 12th round of negotiations in September 2008. The two countries signed a preliminary agreement on February 9, 2009.
The Korean government plans to obtain approval at the regular session of the National Assembly in September 2009 so that the Agreement may take effect on January 1, 2010. For India, the official signing will immediately put the Agreement into effect since no further domestic procedures are required.
Once the Korea-India CEPA enters into force, India will eliminate or reduce tariffs on 85 percent of South Korean goods on the basis of products and revenue figures. This includes Korea’s top ten export products to India which include auto parts, steel, machinery, chemicals and electronics. 108 products produced in Kaesung Industrial Complex will also receive preferential treatment.
Korea will eliminate or reduce tariffs on 93 percent of Indian goods. Taking into account India’s high tariff rate, the benefits of tariff elimination and reduction are expected to be substantial. The effects of the partial liberalization of the agricultural, marine and forestry sectors, which both countries find sensitive, are expected to be insignificant.
The significance of the conclusion of the Agreement, above anything else, lies in the fact that Korea will be able to seize the opportunity to secure a foothold in the Indian market ahead of other competing nations. As a BRICs nation, India has an enormous market of 1.15 billion people and is the fourth-largest market in terms of GDP purchasing power parity. Currently, Japan and the EU are negotiating the terms of the agreement, and China and India are at the joint study stage. They have not been able to start the negotiation process yet.
The Korea-India CEPA text can be viewed at the Ministry of Foreign Affairs and Trade FTA website ( www.fta.go.kr ).
