India, Korea iron out CEPA differences, to ink pact by year-end

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New Delhi, Sep 25 : India and Korea, the 12th and the 13th largest economies in the world, respectively, inched closer to signing a Comprehensive Economic Partnership Agreement (CEPA) by resolving all outstanding issues in the negotiations.

At the conclusion of the 12th round of the CEPA talks, held in Seoul from September 22 to 25, both the sides said they expect to finalise the formal text of the agreement, including the schedules for liberalisation of goods, services and investment, by October-end.

According to a statement, "both sides aim to sign the agreement by the year-end after completing all domestic procedures." The agreement will come into effect from the first half of the following year on a mutually agreed date, it added.

The CEPA is expected to accelerate the growth of bilateral trade and investment between Korea and India, the statement said. During the talks, commerce secretary GK Pillai and deputy minister Hye-min Lee represented India and Korea, respectively. The CEPA negotiations had commenced in March 2006.

The bilateral trade has been growing by an average rate of around 27% over the last 3 years and amounted to $11.2 billion in 2007.Economist and trade expert TK Bhaumik said the CEPA with Korea has to be seen in the larger context of India's 'look east' policy and economic integration with east Asia, especially after the free trade agreements with Asean and Thailand as well as the Comprehensive Economic Cooperation Agreement with Singapore. "This is an opportunity for India to diversify its export basket, get advanced technology from Korea and improve cost competitiveness," he said.

A recent study by Ficci said India's share in Korean import market, though rising, is far behind that of China. Its $63-billion exports to Korea accounted for around 18% of Korea's global imports in 2007 whereas those of India stood at $4.62 billion, just 1.3% of Korea's total imports.

Also, another dampening factor was the lack of depth in India's exports basket with petroleum and petro-products comprising 55% of total shipments to Korea. Other major products were from gems and jewellery sector, iron ore, iron and steel, organic chemicals, cotton textiles, oil cake, machinery and instruments. In fact, if petroleum is excluded, India's export figures drop to just over $2 billion and its share in Korea's total non-oil imports comes down steeply to a mere fraction (0.6% in 2007), the Ficci study said.