Context:
India and the European Union have decided to conclude their much-awaited Free Trade Agreement (FTA) by the end of 2025.
Key Highlights:
- 1st time a concrete deadline has been set for the FTA, which has been under negotiation since 2007.
- Set to be the largest trade deal of its kind globally.
- Aims to enhance market access, remove trade barriers, and boost bilateral trade
- Alongside the FTA, negotiations are ongoing for agreements on investment protection and geographical indications.
- Both sides agreed to enhance collaboration in semiconductors, AI, high-performance computing, and 6G.
- A Space Dialogue will also be initiated.
- EU is exploring a future Security and Defence Partnership with India, similar to its agreements with Japan and South Korea.
Free Trade Agreement (FTA):
- An FTA is a collaborative agreement between countries or regional blocs, designed to remove trade barriers through mutual negotiations, all with the goal of boosting trade.
- It encompasses various sectors including goods, services, investment, intellectual property, competition, government procurement etc.
- This concept of free trade is the opposite of trade protectionism or economic isolationism.
- Key Features –
- Tariff Reduction or Elimination – FTAs reduce or remove customs duties on traded goods.
- Market Access – FTAs provide preferential access to goods and services across member countries.
- Trade in Services – Some FTAs also cover liberalization in sectors like IT, finance, and professional services.
- Investment Protection – FTAs often include provisions to protect and promote foreign direct investment (FDI).
- Intellectual Property Rights (IPR) – Many agreements include clauses on patents, trademarks, and copyrights.
- Rules of Origin – FTAs define criteria for goods to qualify for preferential treatment, ensuring only member countries benefit.
- Types –
- Bilateral FTAs – Agreements between 2 countries (e.g., India-UAE CEPA).
- Multilateral FTAs – Agreements among multiple nations or regional groups (e.g., India-ASEAN FTA).
- Comprehensive Economic Partnerships – FTAs covering goods, services, investment, and other areas (e.g., India-Japan CEPA).
India and FTAs:
- India has signed 13 FTAs so far – Sri Lanka, Nepal, Bhutan, Thailand, Singapore, ASEAN, South Korea, Japan, Malaysia, Mauritius, UAE, Australia, South Asian Free Trade Area (SAFTA).
- India is also part of 6 Preferential Trade Agreements – Asia Pacific Trade Agreement (APTA), Global System of Trade Preferences (GSTP), SAARC Preferential Trading Agreement (SAPTA), India-Afghanistan PTA, India-MERCOSUR PTA and India-Chile PTA
Source: ET
Previous Year Question
Consider the following countries:
1. Australia
2. Canada
3. China
4. India
5. Japan
6. USA
Which of the above are among the ‘free-trade partners’ of ASEAN?
[UPSC Civil Services Exam – 2018 Prelims]
(a) 1, 2, 4 and 5
(b) 3, 4, 5 and 6
(c) 1, 3, 4 and 5
(d) 2, 3, 4 and 6
Answer: (c)