International Business

28/04/2023 International Business 1

International Business


• Pallavi Adkar• Harshada Lotlikar• Rajit Kadam• Nikhil Sonar• Sneha Silveri• Tanmayi Mhatre• Amey Khandari• Saumitra Panchal• Ajinkya Wanjalkar• Abhinandan Sawant

Group Members


TRADE AGREEMENTS


Trade Agreements It is a bilateral or multilateral treaty or any other enforceable compact which commits two or more nations to specified terms of commerce, most of time involving mutually beneficial concessions.

Trade agreement is any contractual trade arrangement between states concerning their relationships.

Trade agreement is a type of economic integration

TRADE AGREEMENTS


IMPORTANCE OF TRADE AGREEMENTS1.Reduce trade barriers

• For most countries international trade is regulated by unilateral barriers of several types:

• Tariffs • Nontariff barriers – Two or more nations can go for economic

integration by partial or full abolition of these barriers • Trade agreements are one way to reduce these barriers, thereby

opening all parties to the benefits of increased trade


2. Increase the combined economic productivity • It increase the combined economic productivity of the countries by

economic cooperation • International trade, allows each country to specialize in the goods it can

produce cheaply and efficiently relative to other countries • Specialization enables all countries to achieve higher real incomes

3.Trade agreements bring many benefits for economies around the world • New markets • Jobs • Competitiveness • Foreign investment

CONT..


New markets -Trade liberalization opens new markets between trade partners Free trade zones allow exports to grow

Jobs Trade Agreements can create jobs and help to grow the economy Most of jobs depend on exports.

Foreign investment Free trade agreements spawn foreign investment, creating economic growthAs markets open for each of the trade partners so does investment opportunities

Competitiveness Free trade agreements increase industry competitiveness and the expansion of exports Competition from abroad forces domestic producers to keep prices down


CLASSIFICATIONBy number and type of signatories

A trade agreement is classified as bilateral (BTA) when signed between two sides, where each side could be a country (or other customs territory), a trade bloc or an informal group of countries (or other customs territories).

A trade agreement signed between more than two sides (typically neighbouring or in the same region) is classified as multilateral.


FRAMEWORK AGREEMENTA framework agreement is one which sets the period for future substantive

liberalization by defining the scope and provisions of orientation for some new area of discussions.

List of countries with which India enjoys a framework agreement with are as mentioned under:

GCC states i.e. the member states of the Cooperation Council for the Arab States of the Gulf

The Association of South East Asian Nations

Chile


Preferential Trade Agreement This trade gives preferential right of entry to only certain products. It is done by dropping tariffs, but it does not abolish them completely. PTA is established through trade pact and it is the weakest form of economic integration. India enjoys PTA with the following countries:

Afghanistan Chile MERCOSUR – It is a trading community in Latin America comprising

Brazil, Argentina, Uruguay and Paraguay. It has Chile and Bolivia as its associate members. MERCOSUR was formed in 1991 with the objective of facilitating the free movement of goods, services, capital and people among the four member countries


Removal of disputes Expanded Markets for Exports Specialization of Labour and Capital Foreign employment and economic growth Increased production efficiently & effectively Consumer satisfaction

MERITS


DEMERITSRemoving a trade barrier on a particular good hurts the shareholders

and employees of the domestic industry who produces that good Some of the groups that are hurt by foreign competition wield enough

political power to obtain protection against imports Increased domestic economic instability from international trade

cycles, as economies become dependent on global markets With the removal of trade barriers, structural unemployment may

occur in the short term Pollution and other environmental problems


NAFTA


The North American Free Trade Agreement (NAFTA ) is a trilateral trade bloc in North America created by the governments of the United States, Canada, and Mexico

The agreements were signed in December 1993 by the presidents of the three countries and it came into effect from 1st Jan. 1994

The final provisions were fully implemented on January 1, 2008.NAFTA created the world largest free trade area which now links 450

million people producing 17 trillion worth of goods and services. NAFTA was supplemented by

• North American Agreement on Environmental Cooperation (NAAEC) • North American Agreement on Labour Cooperation (NAALC).

BACKGROUND


OBJECTIVESEliminate barriers to trade in, and facilitate the cross – border

movement of, goods and services between the territories of the Parties.

Promote conditions of fair competition in the free trade area. Increase substantially investment opportunities in the territories of the

Parties.provide adequate and effective protection and enforcement of

intellectual property rights in each Party's territory.Create effective procedures for the implementation and application of

this Agreement, for its joint administration and for the resolution of disputes.

Establish a framework for further trilateral, regional and multilateral cooperation to expand and enhance the benefits of this Agreement.


CHARACTERISTICS OF THE NORTH AMERICAN MARKET


TRADE FLOWS IN NORTH AMERICA


EFFECT OF NAFTA ON CANADACanada has so far experienced significant benefit from:

• U.S. investment in automotive production,• Increases in oil exports to the U.S. and the rest of the world,• Increases in shipment of beef, agricultural, wood and paper products to the U.S.• Export of mineral and mining products, which have fared well in U.S. markets.

However, experienced some losses in narrow sectors such as specialty steel production and processed foods due to U.S. imports.

The eastern and western parts of Canada benefited from NAFTA re-export, as well as from increased traffic through their ports.

U.S. investment provided higher-paying jobs, this added to the ranks of the Canadian middle class and increased the level of secondary education in the population.

It also provided jobs for the wave of immigrants from India and Pakistan who are currently residing in Canada.


EFFECT OF NAFTA ON MEXICOForeign direct investment induced by NAFTA increased 70% in Mexico in 1994 and

was up by 435% a decade later.Corporate investment in maquiladoras was expected to produce a Mexican middle

class that would become a large market for U.S. goods. But the plan failed to live up to expectations, as skills and productivity lagged behind

labour costs and jobs moved to China. U.S./Mexico truck-transport problems also raised costs for Mexican products coming

to the U.S.The migration of workers from Mexico City and further south in numbers, not easily

accommodated in small border towns produced overpopulated slums with high living costs for the Mexican workers.

The increase in the middle class was insignificant and many of the original NAFTA jobs went to Asia.


EFFECT OF NAFTA ON USASectors affected positively include planes, trains and automobiles,

large agri-businesses, appliance makers and energy corporations

These companies enhanced management performance-based compensation while putting downward pressure on production-worker wages which is a contributor to compensation inequality

U.S. manufacturing, often in concentrated geographical areas, suffered large business and job losses as NAFTA cast a shadow over any labour-intensive process that is not highly automated.

workers in Canada and Mexico have displaced 829,280 U.S. jobs, mostly high-wage positions in manufacturing.


THE IMPACT OF NAFTA ON U.S.-MEXICO TRADE

Trade flows between U.S. and Mexico have shot up

The growth in trade between all three NAFTA partners indicates increased specialization, economies of scale, and efficiency

Tariffs on about half of goods traded between U.S. and Mexico were eliminated immediately

• Most dramatic changes in Mexico: average tariffs on U.S. goods fell from 10% to 2.9% between 1993 and 1996,

• while U.S. tariffs on Mexican goods fell from 2.07% to 0.65%


THE NAFTA DEBATE IN THE U.S.: LABOUR AND ENVIRONMENT

NAFTA reignited contention on trade policy in the U.S.

• Blue collar labour unions feared that jobs would migrate to south given Mexico’s lower labour costs

• Environmental groups feared that 1. Polluting U.S. and Canadian firms would move to Mexico, and 2. Pollution would increase along U.S.-Mexico border

Political opposition forced Canada, Mexico, and the U.S. to attach labour and environmental side agreements to NAFTA


THE NAFTA DEBATE IN THE U.S.: IMMIGRATION

Illegal immigration is a contentious issue in U.S.-Mexico relationsBetween 1991 and 2000, some 2.2 million Mexicans were admitted as legal

immigrants and 15 million foreigners, 95 percent Mexicans, were apprehended just inside the U.S. Border

Three causes of migration flows• Demand-pull factors: attraction of U.S. jobs and low unemployment• Supply-push factors: economic recessions and structural problems in

Mexico• Social networks: migrants already in the U.S. provide contacts for

newcomers


DISADVANTAGESNAFTA Lifted Tariffs but not RegulationsFirst and foremost, is that NAFTA made it possible for many U.S. manufacturers to

move jobs to lower-cost Mexico. The manufacturers that remained lowered wages to compete in those industries.

The second disadvantage was that many of Mexico's farmers were put out of business by U.S.-subsidized farm products. NAFTA provisions for Mexican labor and environmental protection were not strong enough to prevent those workers from being exploited.

U.S. Jobs Were LostU.S. Wages Were SuppressedMexico's Farmers Were Put Out of BusinessMaquiladora Workers Were ExploitedMexico's Environment DeterioratedNAFTA Called for Free Access for Mexican Trucks


ADVANTAGESNAFTA Decreased Tariffsthe United States received about a quarter of its imports from these two

countries, which are its second and third largest suppliers of imported goods.NAFTA is credited with significantly increasing trade among the U.S., Mexico

and Canada. The U.S. alone traded $1.6 trillion in goods and services with its NAFTA partners

in 2009, and the U.S. sold 32.2% of its exports to Canada and Mexico in 2010. Trade of goods and services between the U.S., Canada and Mexico has

increased from $337 billion in 1993, before NAFTA went into effect, to $1.182 trillion in 2011.

NAFTA Increased Industrial Integration Between the U.S. and Mexico


OVERALL IMPACT The long-time growth in the U.S. trade deficit accelerated dramatically after NAFTA

became effective in 1994. According to the Bureau of Labour Statistics, the $30 billion U.S. trade deficit in 1993 increased 281% to an inflation-adjusted $85 billion in 2002.

Despite a growing trade deficit, a report from the Office of the U.S. Trade Representative categorizes the trade effects as positive.

• Between 1993 and 2006, trade among NAFTA partners climbed 197%, from $297 billion to $883 billion.

• U.S. exports to NAFTA partners grew 157%, versus 108% to the rest of the world in the same period.

• Daily NAFTA trade in 2006 reached $2.4 billion.• U.S. manufacturing output rose 63% from 1993-2006, compared to an increase

of 37% from 1980-1993.


CONCLUSIONWhile NAFTA's overall financial impact has been generally positive, it has

not lived up to the high expectations of its proponents.

It has made many U.S. companies and investors rich - and their managements richer.

It has also cost many U.S. manufacturing workers their livelihoods while failing to raise living standards for most Mexicans.

Any major market changes not dictated by market forces usually lead to both opportunity and loss, and this has happened with NAFTA


ASSOCIATION OF SOUTH-EAST ASIAN NATIONS


The Association of Southeast Asian Nations or ASEAN, was established on 8 August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration.

The Founding Fathers of ASEAN, namely Indonesia, Malaysia, Philippines, Singapore and Thailand.

Brunei Darussalam then joined on 7 January 1984, Viet Nam on 28 July 1995, Lao PDR and Myanmar on 23 July 1997, and Cambodia on 30 April 1999, making up what is today the ten Member States of ASEAN.

Introduction


Founding Members of ASEAN Members of ASEAN now


"One Vision, One Identity, One Community".

ASEAN Motto


To accelerate the economic growth, social progress and cultural development in the region through joint endeavours in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community of Southeast Asian Nations.

To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries of the region and adherence to the principles of the United Nations Charter.

To promote active collaboration and mutual assistance on matters of common interest in the economic, social, cultural, technical, scientific and administrative fields.

Aims and Purposes


To provide assistance to each other in the form of training and research facilities in the educational, professional, technical and administrative spheres.

To collaborate more effectively for the greater utilisation of their agriculture and industries, the expansion of their trade, including the study of the problems of international commodity trade, the improvement of their transportation and communications facilities and the raising of the living standards of their peoples.

To promote Southeast Asian studies.

To maintain close and beneficial cooperation with existing international and regional organisations with similar aims and purposes, and explore all avenues for even closer cooperation among themselves.


In their relations with one another, the ASEAN Member States have adopted the following fundamental principles, as contained in the Treaty of Amity and Cooperation in Southeast Asia (TAC) of 1976:

Mutual respect for the independence, sovereignty, equality, territorial integrity, and national identity of all nations.

The right of every State to lead its national existence free from external interference, subversion or coercion.

FUNDAMENTAL PRINCIPLES


Non-interference in the internal affairs of one another.

Settlement of differences or disputes by peaceful manner.

Renunciation of the threat or use of force.

Effective cooperation among themselves.


The ASEAN Vision 2020, adopted by the ASEAN Leaders on the 30th Anniversary of ASEAN, agreed on a shared vision of ASEAN as a concert of Southeast Asian nations, outward looking, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring societies.

At the 9th ASEAN Summit in 2003, the ASEAN Leaders resolved that an ASEAN Community shall be established.

ASEAN COMMUNITY


ASEAN Political-Security

Community

ASEAN Economic

Community

ASEAN Socio-Cultural

Community

3 PILLARS OF ASEAN COMMUNITY

Each pillar has its own Blueprint, and, together with the Initiative for ASEAN Integration (IAI) Strategic Framework and IAI Work Plan

Phase II (2009-2015), they form the Roadmap for an ASEAN Community 2009-2015.


The ASEAN Charter serves as a firm foundation in achieving the ASEAN Community by providing legal status and institutional framework for ASEAN. It also codifies ASEAN norms, rules and values; sets clear targets for ASEAN; and presents accountability and compliance.

The ASEAN Charter entered into force on 15 December 2008. A gathering of the ASEAN Foreign Ministers was held at the ASEAN Secretariat in Jakarta to mark this very historic occasion for ASEAN.

ASEAN CHARTER


With the entry into force of the ASEAN Charter, ASEAN will henceforth operate under a new legal framework and establish a number of new organs to boost its community-building process.

In effect, the ASEAN Charter has become a legally binding agreement among the 10 ASEAN Member States.


According to Article 31 of the ASEAN Charter, the Chairmanship of ASEAN shall rotate annually, based on the alphabetical order of the English names of Member States.

A Member State assuming the Chairmanship shall chair the ASEAN Summit and related summits, the ASEAN Coordinating Council, the three ASEAN Community Councils, relevant ASEAN Sectoral Ministerial Bodies and senior officials, and the Committee of Permanent Representatives.

Malaysia is the Chair of ASEAN for 2015 and the theme of its ASEAN Chairmanship is "Our People, Our Community, Our Vision."

ASEAN CHAIR



Seventh-largest economy in the world, with a combined GDP of $2.4 trillion in 2013

Labour-force expansion and productivity improvements.

Larger population than the European Union or North America.

Third-largest labour force in the world.

More than 60 percent of total growth since 1990 has come from productivity gains.

ASEAN’S TEN MEMBER STATES FORM AN ECONOMIC POWERHOUSE


ASEAN IS NOT A MONOLITHIC MARKET.

Indonesia represents almost 40 percent of the region’s economic output.

GDP per capita in Singapore, more than 30 times higher than in Laos and 50 times higher than in Cambodia and Myanmar.

That diversity extends to culture, language, and religion.


MACROECONOMIC STABILITY HAS PROVIDED A PLATFORM FOR GROWTH

After the financial crisis, had a strong financial stability ( Govt. debt is under 50% of the GDP).

Savings level steady since 2005


ASEAN IS A GROWING HUB OF CONSUMER DEMAND.

Outpaced the rest of the world on growth in GDP per capita since the late 1970s.

Income growth has remained strong since 2000.

Extreme poverty is rapidly receding.

A greater focus on leisure activities, a growing preference for modern retail formats


ASEAN IS WELL POSITIONED IN GLOBAL TRADE FLOWS

ASEAN is the fourth-largest exporting region in the world.

It accounts for 7 percent of global exports..

Vietnam specializes in textiles and apparel, Singapore and Malaysia (Electronics).

Thailand has joined the ranks of leading vehicle and automotive-parts exporters.

Indonesia is the world’s largest producer and exporter of palm oil.


INITIATIVES UNDERTAKEN BY ASEAN Free Trade

• Spearheaded by the implementation of the ASEAN Trade in Goods Agreement (ATIGA)

• free trade agreements with China, Japan, South Korea, India, Australia, and New Zealand (Stated on 26th August 2007)

• 27 February 2009- Australia and New Zealand

Food Security• Food Summit of 1996 "when all people at all times have access to sufficient, safe,

nutritious food to maintain a healthy and active life“

Education Integration (Promoting ASEAN awareness, Strengthening identity, building Human Resources, Asian University Network)


The ASEAN–India Free Trade Area (AIFTA) is a free trade area among the ten member states of the Association of Southeast Asian Nations (ASEAN) and India.

The initial framework agreement was signed on 8 October 2003 in Bali, Indonesia and the final agreement was on 13 August 2009.

The free trade area came into effect on 1 January 2010.

India hosted the latest ASEAN-India Commemorative Summit in New Delhi on 20–21 December 2012. As of 2011-12, two-way trade between India & ASEAN stood at US$ 79.86 billion surpassing the US$ 70 billion target.

ASEAN and INDIA



The ASEAN–India Free Trade Area emerged from a mutual interest of both parties to expand their economic ties in the Asia-Pacific region. India's Look East policy was reciprocated by similar interests of many ASEAN countries to expand their interactions westward.

After India became a sectoral dialogue partner of ASEAN in 1992, India saw its trade with ASEAN increase relative to its trade with the rest of the world. Between 1993 and 2003, ASEAN-India bilateral trade grew at an annual rate of 11.2%, from US$ 2.9 billion in 1993 to US$ 12.1 billion in 2003.

Much of India's trade with ASEAN is directed towards Singapore, Malaysia, and Thailand, with whom India holds strong economic relations


In 2008, the total volume of ASEAN-India trade was US$ 47.5 billion. ASEAN’s export to India was US$ 30.1 billion – a growth of 21.1 per cent in comparison with that of 2007. ASEAN’s imports from India were US$ 17.4 billion – a growth of 40.2 per cent in comparison to that of 2006. As for foreign direct investment (FDI), the inflow from India to ASEAN Member States was US$476.8 million in 2008, accounting for 0.8 per cent of total FDI in the region. Total Indian FDI into ASEAN from 2000 to 2008 was US$ 1.3 billion.

Acknowledging this trend and recognising the economic potential of closer linkages, both sides recognised the opportunities for deepening trade and investment ties, and agreed to negotiate a framework agreement to pave the way for the establishment of an ASEAN–India Free Trade Area (FTA).


At the Second ASEAN-India Summit in 2003, the ASEAN-India Framework Agreement on Comprehensive Economic Cooperation was signed by the Leaders of ASEAN and India.

The Framework Agreement laid a sound basis for the eventual establishment of an ASEAN-India Regional Trade and Investment Area (RTIA), which includes FTA in goods, services, and investment.

ASEAN and India signed the ASEAN-India Trade in Goods (TIG) Agreement in Bangkok on 13 August 2009, after six years of negotiations. The ASEAN-India TIG Agreement entered into force on 1 January 2010.


The 7th ASEAN-India Summit in Cha-am Hua Hin, Thailand on 24 October 2009 agreed to revise the bilateral trade target to 70 billion USD to be achieved in the next two years, noting that the initial target of USD 50 billion set in 2007 may soon be surpassed.

ASEAN-India trade grew at over 22 percent annually during the 2005-2011 period. Trade between India and ASEAN in 2011-2012 increased by more than 37 percent to $79 billion, which was more than the target of $70 billion set in 2009.

At the 10th ASEAN-India Summit in New Delhi on 20 December 2012, India and ASEAN concluded negotiations for FTAs in services and investments. The two sides expect bilateral trade to increase to $100 billion by 2015, and $200 billion within a decade.


ASEAN and India are also working on enhancing private sector engagement. Details on the re-activation of the ASEAN-India Business Council (AIBC), the holding of the ASEAN-India Business Summit (AIBS) and an ASEAN-India Business Fair (AIBF), are being worked out by officials.

On 27 April 2010, India informed the ASEAN Secretariat that the Federation of Indian Chambers of Commerce and Industry (FICCI) would be organising the ASEAN Trade and Industrial Exhibition at the Pragati Maidan in New Delhi on 8–11 January 2011, at the side-lines of the AIBF.


The Fourteenth ASEAN Transport Ministers (ATM) Meeting on 6 November 2008 in Makati, Metro Manila, Philippines adopted the ASEAN-India Aviation Cooperation Framework, which will lay the foundation for closer aviation co-operation between ASEAN and India.

The ASEAN-India Air Transport Agreement (AI-ATA) is being negotiated with the implementation timeline of 2011.

In tourism, the number of visitor arrivals from ASEAN to India in 2006 was 277,000, while the number of visitor arrivals from India to ASEAN in 2008 was 1.985 million.


At the Sixth ASEAN-India Summit held on 21 November 2007 in Singapore, India proposed to set a target of 1 million tourist arrivals from ASEAN to India by 2010.

The 2nd Meeting of ASEAN and India Tourism Ministers (ATM + India) held on 25 January 2010 in Bandar Seri Begawan positively responded to India’s proposal to develop an ASEAN-India Tourism Cooperation Agreement and requested the ASEAN-India Tourism Working Group to further discuss and prepare the draft agreement.

The Ministers also supported the establishment of the ASEAN Promotional Chapter for Tourism in Mumbai as an important collaborative platform for ASEAN National Tourism Organisations (NTOs) to market Southeast Asia to the Indian consumers and, at the same time, create mutual awareness between ASEAN Member States and India.


COMESA(Common Market for Eastern and

Southern Africa)


Overview of COMESAThe history of COMESA began in December 1994 when it was formed to replace

the former Preferential Trade Area (PTA) which had existed from the earlier days of 1981.

COMESA was established 'as an organisation of free independent sovereign states which have agreed to co-operate in developing their natural and human resources for the good of all their people’

However, due to COMESA's economic history and background its main focus is on the formation of a large economic and trading unit that is capable of overcoming some of the barriers that are faced by individual states.

Ref : www.comesa.int


COMESA's current strategy can thus be summed up in the phrase 'economic prosperity through regional integration'.

19 member statesPopulation of over 470.26 million.Annual import bill of around US$170,895 million. Export bill of US$112,546 million. COMESA forms a major market place for both internal and external trading. Its area is impressive on the map of the African Continent covering a geographical

area of 12 Million (sq. km). Its achievements to date have been significant.


Overview of COMESA (contd.)


Vision

COMESA’s Vision is to “be a fully integrated, internationally competitive regional economic community with high standards of living for all its people ready to merge into an African Economic Community”



MissionIts Mission to “Endeavour to achieve sustainable economic and social progress in

all Member States through increased co-operation and integration in all fields of development particularly in trade, customs and monetary affairs, transport, communication and information, technology, industry and energy, gender, agriculture, environment and natural resources”.

The Secretariat was guided to develop its specific Mission Statement as follows: “To provide excellent technical services to COMESA in order to facilitate the region’s sustained development through economic integration”.



Core ValuesThe Secretariat believes in satisfying its customersIt delivers services with professionalism, integrity and innovation.It believes in quality leadership, teamwork and respect for each other

in an enabling environment.It cares for the environment and upholds its social responsibility The Mission and Values Statements on their own are not sufficient to

ensure an efficient and effective service delivery.



Core Values (Contd.)They have to be linked to the strategy of the Secretariat which is building

excellence into every process of the organisation through: • Creation of a participatory environment which allows and encourages

every staff to contribute to the development of the organisation either individually or in teams.

• Enhancement staff competencies through continuous improvement.• Establishment of economical, efficient and effective systems and

procedures.• Effective and efficient communication.



Evolution of PTA/COMESAThe COMESA traces its genesis to the mid 1960s.

The idea of regional economic co-operation received considerable impetus from the buoyant and optimistic mood that characterised the post-independence period in most of Africa. The mood then was one of pan-African solidarity and collective self-reliance born of a shared destiny. It was under these circumstances that, in 1965, the United Nations Economic Commission for Africa (ECA) convened a ministerial meeting of the then newly independent states of Eastern and Southern Africa to consider proposals for the establishment of a mechanism for the promotion of sub-regional economic integration.

The meeting, which was held in Lusaka, Zambia, recommended the creation of an Economic Community of Eastern and Central African states.



EVOLUTION OF PTA/COMESA (CONTD.)An Interim Council of Ministers, assisted by an Interim Economic Committee of officials, was

subsequently set up to negotiate the treaty and initiate programmes on economic co-operation, pending the completion of negotiations on the treaty.

In 1978, at a meeting of Ministers of Trade, Finance and Planning in Lusaka, the creation of a sub-regional economic community was recommended, beginning with a sub-regional preferential trade area which would be gradually upgraded over a ten-year period to a common market until the community had been established.

To this end, the meeting adopted the "Lusaka Declaration of Intent and Commitment to the Establishment of a Preferential Trade Area for Eastern and Southern Africa" (PTA) and created an Inter-governmental Negotiating Team on the Treaty for the establishment of the PTA.

The meeting also agreed on an indicative time-table for the work of the Intergovernmental Negotiating Team.



EVOLUTION OF PTA/COMESA (CONTD.)

• After the preparatory work had been completed a meeting of Heads of State and Government was convened in Lusaka on 21st December 1981 at which the Treaty establishing the PTA was signed.

• The Treaty came into force on 30th September 1982 after it had been ratified by more than seven signatory states.

• The PTA was established to take advantage of a larger market size, to share the region's common heritage and destiny and to allow greater social and economic co-operation, with the ultimate objective being to create an economic community.

• The PTA Treaty envisaged its transformation into a Common Market and, in conformity with this, the Treaty establishing the COMESA, was signed on 5th November 1993 in Kampala, Uganda and was ratified a year later in Lilongwe, Malawi on 8th December 1994.



EVOLUTION OF PTA/COMESA (CONTD.)

It is important to underline the fact that the establishment of PTA, and its transformation into COMESA, was in conformity with the objectives of the Lagos Plan of Action (LPA) and the Final Act of Lagos (FAL) of the Organisation of African Unity (Organisation of African unity).

Both the LPA and the FAL envisaged an evolutionary process in the economic integration of the continent in which regional economic communities would constitute building blocks upon which the creation of an African Economic Community (AEC) would ultimately be erected.



COMESA Members


COMESA Members



CHANGES IN THE REGIONAL ECONOMY

Up until the late 1980s and early 1990s most COMESA countries followed an economic system which involved the state in nearly all aspects of production, distribution and marketing, leaving the private sector to play a minor economic role.

This system promoted import substitution and subsidised consumption



CHANGES IN THE REGIONAL ECONOMY (CONTD.)

The inefficiencies inherent in this system contributed significantly to the economic decline of the PTA/COMESA region. For example, by the mid 1990s:

Gross domestic investment had fallen consistently for 20 years to a level below a minimum investment ratio of the required 20% of GDP needed to cover depreciation and repair costs; foreign direct investment (FDI) in Africa was negligible, at approximately 1 per cent of GDP, representing 0.8 per cent of all FDI and 2.1 per cent of FDI going into all developing countries.

The share of exports from sub-Saharan Africa in world exports declined from 2.5% in 1970 to 1% in 1990, while its share in developing country exports declined from 13.2% to 4.9% in the same period.



Changes in the Regional Economy (Contd.)

External debt of the COMESA region had, by the early 1990s, increased twenty-fold since 1970. Debt service ratios, which in 1970 were insignificant, averaged 45 per cent of export earnings in 1989-90, making the region one of the most heavily indebted in the world. The aggregate external debt owed by sub-Saharan Africa, including South Africa, was US$318 billion in 1994, compared to external financing to all African countries of about US$15 billion in 1996.

Although industrial output grew in the 1960s and 1970s, this was followed by a sharp decline as a result of entrenched structural rigidities, weak inter-industry and inter-sectoral linkages, lack of access to advanced technologies and poor institutional and physical infrastructure. The African continent's share of world manufacturing value added (MVA) rose from 0.7 per cent in 1970 to 1 per cent in 1982 and fell to 0.8 per cent in 1994.



CHANGES IN THE REGIONAL ECONOMY (CONTD.)

Thus from 1960 up until the mid-1990s, the economic growth of the COMESA region averaged 3.2 per cent a year, a figure marginally above the level of the region's population growth. By 1993, this region of about 280 million people then (excluding Egypt), which had more than doubled its population since independence, had a total GDP of around US$90 billion, and included fifteen of the twenty-three States classified as Least Developed Countries (LDC's) by the United Nations.



WHAT COMESA OFFERSCOMESA offers its members and partners a wide range of benefits which include:

A wider, harmonised and more competitive marketGreater industrial productivity and competitivenessIncreased agricultural production and food securityA more rational exploitation of natural resourcesMore harmonised monetary, banking and financial policiesMore reliable transport and communications infrastructure.



AIMS AND OBJECTIVES OF THE COMMON MARKET

To attain sustainable growth and development of the Member States by promoting a more balanced and harmonious development of its production and marketing structures

To promote joint development in all fields of economic activity and the joint adoption of macro-economic policies and programmes to raise the standard of living of its peoples and to foster closer relations among its Member States

To co-operate in the creation of an enabling environment for foreign, cross border and domestic investment including the joint promotion of research and adaptation of science and technology for development



AIMS AND OBJECTIVES OF THE COMMON MARKET (CONTD.)

To co-operate in the promotion of peace, security and stability among the Member States in order to enhance economic development in the region.

To co-operate in strengthening the relations between the Common Market and the rest of the world and the adoption of common positions in international fora.

To contribute towards the establishment, progress and the realisation of the objectives of the African Economic Community



FUNDAMENTAL PRINCIPLESequality and inter-dependence of the Member States.solidarity and collective self-reliance among the Member States.inter-State co-operation, harmonisation of policies and integration of

programmes among the Member States.non-aggression between the Member States.recognition, promotion and protection of human and peoples' rights

in accordance with the provisions of the African Charter on Human and Peoples' Rights.



FUNDAMENTAL PRINCIPLES (CONTD.)

Accountability, economic justice and popular participation in development

The recognition and observance of the rule of law

The promotion and sustenance of a democratic system of governance in each Member State

The maintenance of regional peace and stability through the promotion and strengthening of good neighbourliness

The peaceful settlement of disputes among the Member States, the active cooperation between neighbouring countries and the promotion of a peaceful environment as a pre-requisite for their economic development.



DECISION MAKING PROCESSCOMESA has evolved a comprehensive decision making structure at the

top of which are the Heads of State of the 20 member countries. There is then a Council of Ministers responsible for policy making, 12

technical committees and a series of other advisory bodies (including specific relations with partner countries and the business community).

In addition each member state appoints liaison persons in their appropriate ministries who form part of the day-to-day communication process.

Overall co-ordination is achieved through the Secretariat, based in Lusaka, Zambia, who will be happy to deal with all initial communication.



FREE TRADE AREAThe FTA was achieved on 31st October, 2000 when nine of the member States

namely Djibouti, Kenya, Madagascar, Malawi, Mauritius, Sudan, Zambia and Zimbabwe eliminated their tariffs on COMESA originating products, in accordance with the tariff reduction schedule adopted in 1992.

This followed a trade liberalisation programme that commenced in 1984 on reduction and eventual elimination of tariff and non-tariff barriers to intra- regional trade.

Burundi and Rwanda joined the FTA on 1st January 2004.

These eleven FTA members have not only eliminated customs tariffs but are working on the eventual elimination of quantitative restrictions and other non-tariff barriers.



CUSTOMS UNIONA Customs Union maybe defined as a merger of two or more customs

territories into a single customs territory, in which customs duties and other measures that restrict trade are eliminated for substantially all trade between the merged territories.

The territories, in turn apply the same duties and measures in their trade with third parties.

In preparation for a Customs Union the Eleventh Meeting of the Council of Ministers held in Cairo, Egypt adopted a Road Map that outlined programmes and activities whose implementation was necessary before the launching of the Union.



TRADE PROMOTIONThe Member States shall adopt measures designed to promote trade within the Common Market. In this regard, Member States shall :

ensure the development and dissemination of market intelligence and trade information with a view to providing the widest possible knowledge-base of intra-Common Market trade opportunities and encourage the development of exports and markets to meet the public and private procurement needs;

actively encourage the undertaking of supply and demand surveys, the organisation of buyers and sellers meetings and other multi-country contact promotion events in order to further identify and exploit the potential of intra-Common Market trade;

undertake the removal of measures that have been identified during the market surveys, which restrict the flow of goods and services to their identified markets, including the establishment of agency offices, trade missions, free movement of samples and advertising;



TRADE PROMOTION (CONTD.)The Member States shall adopt measures designed to promote trade within the Common Market. In this regard, Member States shall :

identify the possibilities of product adaptation and diversification to broaden their respective export base with a view to expanding or introducing products to new markets in the Member States;

review and initiate programmes for the rationalisation and improvement of import operations and techniques to ensure that savings will accrue from such rationalisation of purchase operations;

seek to ensure that donor-funded import procurement programmes allow as far as possible for the purchase of goods from other Member States;

organise frequent general and specialised trade fairs; Ref : www.comesa.int


The Member States shall adopt measures designed to promote trade within the Common Market. In this regard, Member States shall :

improve the performance of small-and-medium scale enterprises for export development such as marketing, business management and the provision of credits;

promote export-oriented joint ventures, by encouraging and facilitating enterprise-to enterprise contacts;

support privatisation endeavours through the introduction of trade services or improvement of the trade promotion infrastructure to meet the special requirements of privatised companies; and

encourage the improvement of services relating to trade such as export financing, quality control and standardisation, packaging and specification aspects, warehousing and storage operations, and others that will increase the flow of goods within the Member States.


TRADE PROMOTION (CONTD.)


Other objectives which will be met to assist in the achievement of trade promotion include:

Trade liberalisation and Customs co-operation, including the introduction of a unified computerised Customs network across the region.

Improving the administration of transport and communications to ease the movement of goods services and people between the countries.




Other objectives which will be met to assist in the achievement of trade promotion include:

Creating an enabling environment and legal framework which will encourage the growth of the private sector, the establishment of a secure investment environment, and the adoption of common sets of standards.

The harmonisation of macro-economic and monetary policies throughout the region.




COMESA PROGRAMMESTrade policyTrade FacilitationMultilateral TransportInformation Communication Technology (ICT)EnergyPrivate Sector DevelopmentInvestment PromotionGender Mainstreaming.



Trade, Customs and Monetary Affairs

The final objective of cooperation in Trade, Customs and Monetary Affairs is to achieve a fully integrated, internationally competitive and unified single economic space within which goods, services, capital and labour are able to move freely across national frontiers.



Thus, the programme of cooperation aims to achieve the removal of all physical, technical, fiscal and monetary barriers to intra-regional trade and commercial exchanges through the following stages of integration:

A Preferential Trade Area (PTA) with lower tariffs applied to intra-regional trade originating in member countries than to extra-regional trade.

A Free Trade Area (FTA), in which no tariffs are levied on goods from other member States whilst each member State applies its own regime of tariffs to goods imported from outside the region.

A Customs Union (CU) involving free trade amongst the member States but with a Common External Tariff (CET) according to which every member State applies the same tariffs on goods from outside the region.

A Common Market (CM) with free movement of capital and labour, considerable harmonisation of trade, exchange rate, fiscal and monetary policies, internal exchange rate stability and full internal convertibility.

An Economic Community (EU) with a common currency and unified macroeconomic policy.Ref : www.comesa.int

Trade, Customs and Monetary Affairs (CONT..)


COMESA YELLOW CARD SCHEME

The COMESA Yellow Card is a motor vehicle insurance scheme which is valid in all the participating countries.

It covers third-party liabilities and medical expenses for the driver of the vehicle and his passengers should they suffer any bodily injury as a result of an accident to an insured vehicle.

It also facilitates cross border movement of vehicles between COMESA member countries.

As this card is valid in many parts of the region, transporters and motorists do not have to buy insurance cover at each border post they cross.



For example, if a Kenyan motorist wishes to drive to Harare, Zimbabwe, he will purchase a Yellow Card from an insurance company in Kenya for the required period of time and to cover the countries he will travel through.

If on his way to Zimbabwe he is involved in an accident in Malawi all he will be required to do is to report to the Malawian Yellow Card National Bureau, which is the focal point (often an insurance company) representing all the insurance companies issuing Yellow Cards, and the traffic police.

The National Bureau will then handle and settle the claim arising from this accident.

Therefore, if his vehicle is in a roadworthy state the motorist is then free to continue his journey to Zimbabwe.


COMESA YELLOW CARD SCHEME (CONT..)


The scheme is currently operational in Burundi, Democratic Republic of Congo, Eritrea, Ethiopia, Kenya, Malawi, Rwanda, Uganda, Tanzania, Zambia and Zimbabwe. About 150 insurance companies are involved in the operation of the scheme and issue about 50,000 cards annually.


COMESA YELLOW CARD SCHEME (CONT..)


INFRASTRUCTURE

COMESA has recognized infrastructure development as a priority and strategic focus area that requires special attention.

The Strategic Objective to be pursued is, therefore, to effectively address constraints related to the improvement of infrastructure and services in the region in order to reduce the cost of doing business and also and to enhance competitiveness, through fostering physical regional connectivity and deepening infrastructure integration.



A holistic and corridor based approach to infrastructure development has been adopted s based on three key pillars i.e. policy and regulatory harmonization, development of priority regional physical infrastructure covering transport, information communications technologies (ICT) and energy.

The transport sector covers civil aviation, surface transport (covering road and rail) and water transport covering maritime and inland water transport subsectors

The ICT comprises telecommunications, broadcasting and postal services subsectors, whilst Energy covers electricity, fossil fuels and renewable energy subsectors.


INFRASTRUCTURE (CONT..)


A number of key strategies have been adopted in order to achieve the infrastructure strategic objective indicated before. They include the following:Development and revision of model policies and regulations (for

Transport, ICT, and Energy);Development of aid for trade programs along the major regional

corridors including the establishment of One Stop Border Posts (OSBPs);Development of legal and institutional frameworks for public private

sector partnerships in order to increase the private sector participation in infrastructure development; and

Implementation of a communication strategy for the dissemination of information on development of infrastructure projects to all stakeholders.


INFRASTRUCTURE (CONT..)


COMESA AGRICULTURAL PROGRAMMES

COMESA Member States are cognizant of the critical role that agriculture plays in their national economies.

Agriculture is considered to be the engine for economic development

in the COMESA region.

The sector accounts for more than 32 per cent of COMESA's gross domestic product (GDP), provides a livelihood to about 80 per cent of the region's labour force, accounts for about 65 per cent of foreign exchange earnings and contributes more than 50 per cent of raw materials to the industrial sector.



The objectives of the COMESA Treaty and the COMESA Agricultural Policy (CAP) are in line with the broader Comprehensive African Agricultural Development Programme (CAADP) of the New Partnership for Africa's Development (NEPAD) under the African Union (AU).

The CAADP has been endorsed by African Heads of State and Governments as a framework for the restoration of agricultural growth, food security and rural development in Africa within an integrated and coordinated approach.


COMESA AGRICULTURAL PROGRAMMES (CONT..)


CAADP defines four Pillars for improving Africa's agriculture:

• Extending the area under sustainable land management and reliable water control systems;

• Improving rural infrastructure and trade related capacities for market access;

• Increasing food supply, reducing hunger and improving responses to food emergency crises; and

• Improving agricultural research, technology dissemination and adoption.




The overall African Union vision for agriculture is that the Continent by the year 2015 should: Improve the productivity of agriculture to attain an average annual production growth rate of

6%, with particular attention to small-scale farmers, especially women;Have dynamic agricultural markets within countries and between regions;Have integrated farmers into the market economy and have improved access to markets to

become a net exporter of agricultural products taking into account Africa's comparative and competitive advantage;

Achieved a more equitable distribution of wealth as a result of rising real incomes and relative wealth for rural populations through more equitable access to land, physical and financial resources, and the knowledge, information and technology for sustainable development;

Be a strategic player in agricultural science and technology development to meet growing needs and demands of African agricultural development;

Practice environmentally sound production methods and have a culture of sustainable management of the natural resource base through increased knowledge, information and technology application.




OTHER ACTIVITIES / PROGRAMInformation and Networking DivisionScience and TechnologyLegal DivisionPeace and SecurityBudget and Finance DivisionGender and Social Affairs Division



COMESA INSTITUTIONS Several institutions have been created to promote sub-regional co-operation and

development. These include:The COMESA Trade and Development Bank in Nairobi, KenyaThe COMESA Clearing House in Harare, ZimbabweThe COMESA Association of Commercial Banks in Harare, ZimbabweThe COMESA Leather Institute in EthiopiaThe COMESA Re-Insurance Company (ZEP-RE) in Nairobi, Kenya

In addition a Court of Justice was also established under the COMESA Treaty and became formally operational in 1998.

Further initiatives exist to promote cross border initiatives, form a common industrial policy and introduce a monetary harmonisation programme.



SECURITY AND OTHER RESTRICTIONS TO TRADE

A Member State may, after having given notice to the Secretary-General of its intention to do so, introduce or continue or execute restrictions or prohibitions affecting: the application of security laws and regulations; the control of arms, ammunition and other war equipment and military items; the protection of human, animal or plant health or life, or the protection of

public morality; the transfer of gold, silver and precious and semi-precious stones; the protection of any item deemed to be of national importance provided that

the Member State concerned shall furnish proof to the Council that the item is of national importance; and

the maintenance of food security in the event of war and famine.



A Member State shall not so exercise the right to introduce or continue to execute the restrictions or prohibitions conferred by this Article as to stultify the free movement of goods envisaged in this Chapter [6(50)].

Security and other restrictions imposed in accordance with paragraph 1 of this Article shall not extend for more than is necessary to achieve security aims and other risks intended to be eliminated and shall be applied on the basis of non-discrimination.

Ref : www.comesa.intRef : www.comesa.int

SECURITY AND OTHER RESTRICTIONS TO TRADE (CONT..)


EC

28/04/2023 International Business

1. TODAY’S CONTEXT

105


• Globalisation- Including fragmentation of value chains

106

• Emergence of new economic powerhouses- China, India, Brazil

• Economic downturn- Trade is part of the solution


2. EU TRADE AND INVESTMENT POLICY

107


EU TRADE AND INVESTMENT POLICYBASIC FEATURES

108

BEING THE LEADING TRADE REGION

Strong interest in: Open markets Clear regulatory

frameworks

Responsibility towards:

EU citizens Rest of the World

Need to reinforce EU

competitiveness on world

markets


REACHING BEYOND THE BORDERS…

109

Trade is no longer just about tariffs…• Standards• Licensing practices• Domestic taxes• Investment

Trade is not just about trade…• Environment• Human Rights• Labour Rights


Trade, Growth and World Affairs

• Pursue active negotiating agenda- Multilateral Trade Agreements- Bilateral Trade Agreements

• Deepen relations with strategic partners- China, Russia, Brazil

• Enforce EU rights, tackling trade barriers

TRADE POLICY AGENDA

110


INVESTMENT POLICY

111

• EU exclusive competence (Lisbon Treaty)• Communication "Towards a comprehensive

European investment policy" (2010)

- Investment protection within negotiations:. On-going: Canada, India, Japan, Morocco, Singapore, USA. Possible: Tunisia, Egypt, Jordan

- Standalone investment agreement with China- Legal certainty and transparency


Dimensions of trade and Investment policy Multilateral Bilateral Unilateral

EU TRADE AND INVESTMENT POLICYTHREE STRANDS

112


EU TRADE AND INVESTMENT POLICYHow we negotiate

The Commission negotiates• On behalf of the 28 Member States• Regular reporting to the Council and the European Parliament

Civil Society and Public Consultations

The Parliament co-decides• EP co-decides with the

Council on trade legislations (except negotiating directives)

• EP gives consent on agreements

The Council co-decides• Directives for negotiations• Follows the negotiation process• Council approve the results of the

negotiation (generally by qualified majority)

18


3. Multilateral Dimension

114


• Context- Launched in 2001- Broad coverage- 2013 window of opportunity (Bali, trade facilitation)?

• Big questions- Where are we today?- Will this make a difference for development?- Will this be a good deal?- Will we get there in the end?

THE DOHA DEVELOPMENT ROUND

115


4. BILATERAL AGREEMENTS

116


BILATERAL RELATIONS (FTAS)

117

Context Globally more than 200 FTAs

Covering more than 35% of global trade

FTAs top up what can be done in WTO

‘Extended’ regionalism


FTA PARTNERS AND TRADE IN GOODS

24In Bn € / 2014. Sources: Comext, regime 4

Country / Region Imports Exports Trade % EU28Trade

USA 204.9 311.1 516.0 15.2China 302.4 165.0 467.4 13.8EFTA 185.5 194.3 379.8 11.2Russia 182.0 103.5 285.5 8.4MEDA (excl EU and Turkey) 77.5 107.3 184.8 5.5ASEAN 100.5 78.6 179.2 5.3GCC 51.4 97.1 148.5 4.4ACP (excl South Africa) 72.5 62.2 134.8 4.0Turkey 54.2 74.8 129.0 3.8Japan 54.5 53.4 107.8 3.2MERCOSUR (5) 44.6 51.3 96.0 2.8South Korea 38.9 43.2 82.1 2.4India 37.0 35.5 72.6 2.1Canada 27.4 31.7 59.1 1.7Mexico 18.2 28.5 46.7 1.4Hong Kong 10.6 34.7 45.4 1.3South Africa 18.4 23.4 41.8 1.2Taiwan 23.2 17.0 40.2 1.2Australia 9.1 29.6 38.7 1.1Ukraine 13.8 17.2 30.9 0.9Andean Community (4) 16.2 12.6 28.8 0.8Central America (6) 6.2 5.2 11.4 0.3Other Countries 132.0 128.2 260.2 7.7Extra EU28 1,681.2 1,705.4 3,386.5 100.0

Grey Concluded or undernegotiations

White No preferential tradeagreement


EXAMPLE: EU-SOUTH KOREA FREE TRADEAGREEMENT

119

€1.6bn in customs duties saved per year Creates new trade opportunities

(between €30bn and €50bn, up 80%) Access for service suppliers Tackling non-tariff barriers Better access to government procurement Protection of intellectual property Strong competition rules Commitment to sustainable development


5. Unilateral Dimension

120


Generalised Scheme of Preferences (GSP) Standard GSP Everything But Arms (EBA) GSP+

Trade Defence Instruments Anti-dumping Anti-subsidy Safeguard measures

5. Unilateral Dimension


6. ENFORCEMENT

122


REMOVING TRADE BARRIERS FOR EU EXPORTERS

123

Market Access Strategy

New opportunities for EU exporters Market Access Partnership:

cooperation: Commission - Member States - businesses

local expertise make trade barriers easier to identify/address


REMOVING TRADE BARRIERS FOR EU EXPORTERS

124

Market Access Strategy

Market Access Partnership (Commission-Member States-Businesses)

Market Access teams created Market Access Database (MADB) to record

barriers under examination in EU trading partners


HOW TO EXPORT FROM THE EUMARKET ACCESS DATABASE

125

Applied Tariffs Statistical Database Non-tariff barriers Sanitary and

Phytosanitary Database Exporters' Guide to Import

Formalities Studies


HOW TO EXPORT INTO THE EUEXPORT HELPDESK

126

Public and free Database on trade in goods Tariffs, trade agreements,

statistics In English, French, Spanish,

Portuguese


LAC


LACIn 1961, Latin American Free Trade Association (ALALC, in its Spanish initials) was established1980 it was replaced by the Latin American Integration Association (ALADI).

Countries - Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Mexico, Nicaragua Panama, Paraguay, Peru, Suriname, Uruguay, Venezuela


Regional Trade Agreements(RTAs) in LAC

MERCOSUR(Southern Cone Common Market)

Andean Pact(Andean Common Market)

CACM(Central American Common Market)

CARICOM(Caribbean Community)

EAI(Enterprise for the Americas Initiative)

LAIA(Latin American Integration Association)

NAFTA(North American Free Trade Agreement)


MERCOSUR (Southern Cone Common Market)

Set up in 1991, members are Argentina, Brazil, Paraguay & Uruguay.

Venezuela has also become a full member in July 2006.

Objective is to form a common market through coordinating fiscal and exchange rate policy, and accelerating economic development

Intra-regional trade is being gradually liberalized

Tariffs on 90% of intra-regional trade has been removed


MERCOSUR CONTINUED

Brazil & Argentina have eliminated intra-regional tariffs, Paraguay and Uruguay are expected to follow.

Common external tariff(CET) ranging from 0-20%

India has signed a PTA with MERCOSUR.


ANDEAN PACT(ANDEAN COMMON MARKET)

Set up in 1969, revived in 1990

Members are Bolivia, Colombia, Ecuador, Peru and Venezuela

Objective - form a common market through harmonization of social and economic policies, and joint programs.

By 1993, tariffs had been eliminated in almost all products

CET (Common External Tariff) ranges between 5-20%, except for Peru

For Peru, CET is a flat rate of 15%


CACM(Central American Common Market)

Set up in 1961, revived in 1990

Members are Costa Rica, El Salvador, Guatemala, Honduras & Nicaragua

Objective is to form a custom union

Agriculture goods are excluded from trade liberalization; a common price band for key agro-products is in place

Many restrictions to intra-regional trade have been lifted

CET ranges between 5-20%


CARICOM(CARIBBEAN COMMUNITY)

Set up in 1973

Members comprise 13 Caribbean countries(Antigua & Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, Suriname, Trinidad & Tobago)

Objective is to form a common market through harmonization of customs procedures

Most intra-regional trade has been liberalized

First phase of reducing CET to a range of 0-35 has been implemented starting in 1993


LAIA (LATIN AMERICAN INTEGRATION

ASSOCIATION, ALADI GROUP) Set up in 1980, formerly known as LAFTA.

Members comprise 12 countries (Argentina, Bolivia, Brazil, Cuba, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, Venezuela)

Objective is to form a common market through extending regional tariff preferences, and ‘partial scope agreements’ among some of the members

A large number of bilateral trade agreements have been signed among the members to liberalize trade in the LAIA group.


EAI(ENTERPRISE FOR THE AMERICAS INITIATIVE)

Set up in 1990

Members comprise CARICOM members, MERCOSUR members, Andean Pact members, and 10 countries including the US

Objective – to achieve a free trade zone for the entire Western Hemisphere

To reinforce market-oriented reforms in LA by expanding trade investment, and strengthening environment policies

Framework agreements establish the agenda for bilateral negotiations as well as institutional mechanisms


NAFTA(North American Free Trade Agreement)Set up in 1994, Members comprise the US, Canada and Mexico

Objective is to form a free trade area in goods and services, government procurement, and intellectual property rights, and liberalization of investment flows and professional services.

Canadian Agro and Mexican petro-products are partially excluded

Effective January 1, 1994, phased elimination of tariffs and non-tariff barriers has started

Objective is to remove all trade barriers over a maximum of 15 year



COLOMBIA´S REGIONAL AGREEMENTS

Agreement signed between Colombia and Mexico G-3

The agreement aims at the liberalization of the trade of goods, commitments in the field of services, including temporary visas for

businessmen, and norms on the treatment of investments and intellectual property,

regulations directly linked to trade, like anti-dumping rights

The G-3 was initially signed by Colombia, Mexico and Venezuela, and while the latter country withdrew from the agreement in 2006, it is still in force between Colombia and Mexico



CHILE´S REGIONAL AGREEMENTS

Chile has negotiated preferential trade agreements within the framework of the ALADI and outside of it.

Some of these are Free Trade Agreements, like the ones signed with Mercosur, Peru, Colombia

Others only aim at the granting of reciprocal preferences (An advantage a state applies in order to match a preference given by another state.), as in the case of the agreements with Bolivia, Ecuador and Venezuela.



AGREEMENTS WITH THIRD-PARTY COUNTRIES

Colombia, Chile and Peru have been responsible for nearly all of the free trade treaties signed between South American and third-party countries, whether developed or developing.

They have signed treaties with their main commercial partners and an important share of their trade

in the case of Chile and Peru, it is done with nations with which they have free trade or preferential treaties.

In addition, they are the only ones in the sub-region which have negotiated a Free Trade Treaty with the United States and the European Union, and at the current time they are broadening and/or deepening their trade links with Asiatic States.



COLOMBIA THIRD PARTY AGREEMENTS With Canada, the countries of the European Free Trade Association and the

United States are now in force and its agreement with the European Union is about to begin operations

The negotiations which are now underway include agreements with Korea, Turkey and Israel

In 2010, 43.1% of Colombian exports were destined for the U.S. market and that market, in turn, is the source of 25.9% of its imports

Most Colombian exports to the United States are already free of tariffs by virtue of several previous preferential schemes in the latter country


CONT..

Just like the agreement with the United States, it is very important for Colombia: the European Union is its second trading partner and in 2010, 12.6% of Colombian exports and 14% of its foreign purchases were done with the community market.

European Market charges on Colombian banana exports will be lower than those found in a 2008 WTO agreement established between the European Union and the producer/exporter countries (the tariff on European imports of bananas is currently 176 Euros per metric ton and will be reduced to 75 Euros by 2020 )



CHILE THIRD PARTY AGREEMENTS In 1990´ it negotiated its first trade agreement outside of the Latin American region

with Canada

Economic Association Agreement with the European Union in 2002, and a short while later, signed a Free Trade Agreement with the United States, in 2003

Asia - agreements include Free Trade Agreements with Korea (2003), China (2004), the P-4 trade bloc (2005)16, Japan (2007), Malaysia (2010) and Vietnam (2011).

According to the WTO, by the middle of 2009, Chile counted on 21 trade agreements involving 57 countries and 92% of its trade was carried out with these trading partners

The agreement between Chile and Australia in the areas of services, &some specific sectors, like telecommunications and financial services


PERU THIRD PARTY AGREEMENTS Between 2006 and 2011 Peru signed trade agreements with nine countries or groups of

countries, either developed or developing, outside of the region: the United States (2006), Singapore (2008), Canada (2008), China (2009), the countries of the European Free Trade Association (2010), Korea (2011) and Thailand (2005), all of which are now in force

with Japan and the European Union, which are still not.

The agreement signed with the United States was the first free trade one signed by Peru outside of the region

export and imports with the United States amounted to nearly a third of its total trade at the middle of the past decade, it does not even amount to a fifth now

The agreement signed between Peru and China at the start of 2009, which has been in force since March 1, 2010, covers the trade both of goods and services


INDIA AND LACIn 1997, taking into consideration the potential for increased trade with Latin America and the Caribbean (LAC), India’s Department of Commerce launched an integrated program called ‘Focus: LAC’

In 2014, India is looking at increasing the share of hi-tech and high value-added defense exports to Latin American countries

India’s investments in LAC have been concentrated in natural resource sectors, pharmaceuticals and IT More recently, India has made substantial investments in equity oil.

Dr. Reddy’s Laboratories acquired a plant in Mexico, and Glenmark has invested in Argentina and Brazil. Zydus-Cadila acquired two Brazilian pharma companies


CONT.… IT-

Tata Consultancy Services, which entered the LAC region in 2001 as a part of its near shoring strategy, the roster of Indian companies with direct presence in LAC includes Wipro, Infosys, Mahindra Satyam. There are now 25 Indian IT firms in LAC employing over 20,000 Latin American.

Defense & Military Ties – firm, MKU Private Limited, manufacturer of ballistic protection equipment for personnel and platforms, has been working with countries such as Brazil, Peru, Chile, Mexico, Colombia, Ecuador, and Paraguay


Free Trade Agreements in South America. Trends, prospects and challenges

trade.ec.europa.eu

http://www.mea.gov.in/

REFERENCE


Thank you

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International Business