The India-South Korea Comprehensive Economic Partnership Agreement(CEPA) will cover free trade in goods services and investments and will be signed by commerce minister Anand Sharma in Seoul on August 7. The trade pact is set to benefit India more as South Korea has made many concessions in its commitments.
The Cabinet had cleared the pact in the second half of June. The date for operationalising the deal will be decided after the South Korean parliament ratifies the treaty.
Significantly, the deal will be inked at a time when the Doha Round of world trade talks are in a limbo and the India-Asean FTA has run in to rough weather in spite of the former approving it. India has an operational CEPA-like pact with Singapore as well.
One of the key USPs of the deal is that South Korea has agreed to allow independent professionals from India to work on a temporary basis in the country. Amongst trade diplomats, this is known as temporary movement of natural persons, where skilled professionals are allowed to work temporarily in a different country.
In the proposed CEPA, 163 different service related sectors have been identified where professionals will be allowed to work temporarily. Maximum period for such a work visa will be for one year. Thus Indian engineers, technicians, lawyers and even English teachers will be able to work in South Korean firms. South Korea has huge demand for english teachers. But the country only allowes native speakers of English language as trainers. India is the only country to which the exception has been made, said a government official. However, Indias demand for allowing nurses to work in the south-Asian country has not been accepted.
The maximum benefit would go to Software services as professionals from the sector would be required to present at the clients officeoften based in a different country - while undertaking a project.
However, the relaxations for Indian professionals will be subject to certain conditions and prevalent domestic laws. For example, contract with a South Korean company will be mandatory, before a visa is issued.
South Korea has also committed to consider applications from Indian banks to set up branches in the country. On its part, India has committed to consider a limited number of applications (ten) by South Korean Banks in a period of four years.
Moreover, Indian law firms will be able to open branches in South Korea as well. Indian law professionals in such firms will have to follow certain conditions, like staying in South Korea for a minimum of 180 days. But India has not committed to open up its legal services sector for South Korean law firms. This is because India does not allow foreign law firms to operate here.
India has agreed to eliminate tariffs in case of 70% of items imported from Korea, while Korea has agreed to do so in 90% of items exported from India. Also, India would maintain 15% of the items in the negative list. In addition, about 500 goods will see duties being bought down below 5%. The balance 5% will see import duties being halved. In India , these duty cuts will be carried out in a span of eight years. However, South Korean will slash the duty with immediate effect.