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A ) &-2 is a type of intergovernmental agreement, often
part of a regional intergovernmental organization, where
regional barriers to trade (tariffs and non-tariff barriers) are
reduced or eliminated among the participating states.
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A preferential trade agreement is perhaps the weakest form of
economic integration. In a PTA countries would offer tariff
reductions, though perhaps not eliminations, to a set of partner
countries in some product categories. Higher tariffs, perhaps non
discriminatory tariffs, would remain in all remaining product
categories.
This type of trade agreement is not allowed among WTO members
who are obligated to grant most-favored nation status to all other
WTO members.
6 M ) 6
A free trade area occurs when a group of countries agree to
eliminate tariffs between themselves, but maintain their own
external tariff on imports from the rest of the world.
The North American Free Trade Area is an example of a FTA
FTAs generally develop elaborate "rules of origin". These rules are
designed to prevent goods from being imported into the FTA
member country with the lowest tariff and then transshipped to the
country with higher tariffs.
Õ !
A customs union occurs when a group of countries agree to
eliminate tariffs between themselves and set a common external
tariff on imports from the rest of the world. The European Union
represents such an arrangement.
A customs union avoids the problem of developing complicated
rules of origin, but introduces the problem of policy coordination.
With a customs union, all member countries must be able to agree
on tariff rates across many different import industries.
Õ
A common market establishes free trade in goods and services, sets
common external tariffs among members and also allows for the
free mobility of capital and labor across countries.
2! 2
An economic union typically will maintain free trade in goods and
services, set common external tariffs among members, allow the
free mobility of capital and labor, and will also relegate some
fiscal spending responsibilities to a supra-national agency. The
European Union's Common Agriculture Policy (CAP) is an example
of a type of fiscal coordination indicative of an economic union.
ë
ëonetary union establishes a common currency among a group of
countries. This involves the formation of a central monetary
authority which will determine monetary policy for the entire
group. The ëaastricht treaty signed by EU members in 1991
proposed the implementation of a single European currency (the
Euro) by 1999.
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outh Asian Association for Regional Cooperation
t is an ssociation for
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Committees
Vudget and ëanagement Committee
Economic Committee
Committee on Trade and Investment
Oë teering Committee on Economic and Technical Cooperation
Working Groups include
Agricultural Technical Cooperation
Emergency Preparedness
Human Resources Development
Industrial cience and Technology
ëarine Resource Conservation
mall and ëedium Enterprises
Telecommunications and Information
Tourism
Transportation
82 3 22! 26
Vetween 2002-2006, the costs of business transactions across the
region was reduced by 6 percent, (TFAPI)
hopes to achieve an additional 5 percent reduction in business
transaction costs.
APEC is considering the prospects and options for a Free Trade Area of
the Asia-Pacific (FTAAP)
Criticism
APEC has been criticized for failing to clearly define itself or serve
a useful purpose
whether it has accomplished anything constructive remains
debatable
) )
India has requested membership in APEC, and received initial support
from the United tates, Japan and Australia
ëembership criteria
be located in the Asia-Pacific region;
have substantial and broad-based economic linkages with existing APEC
members and in particular, the value of the applicant's trade with APEC
members, as a percentage of its international trade, should be relatively
high;
be pursuing externally oriented, market-driven economic policies; and
accept the basic objectives and principles set out in the various APEC
declarations, especially those from the Economic Leaders' ëeeting. On
all these criteria, India today is highly qualified for APEC membership.
) )
Venefits for APEC & India
it has become an important investment destination, with many
sectors open for foreign investment
its trade has increased many fold, encompassing both goods and
services
it has gained experience in dealing with East Asia, with free trade
agreements being worked out with AEAN and its constituents
India's relationships with Australia, China, Japan, Russia, ingapore
and the U have never been as strong and multi-faceted as now
The APEC region is home to the world·s four largest economies
(China, India, Japan and the United tates) and it makes no strategic
sense to exclude one of the four
:
The establishment of outh East Asia, New Zealand, Australia (EANZA)
grew out of a 1956 meeting of central bank governors from the Asia-
Oceanic region
One of the oldest and largest regional central bank groups,
membership grew from the original five to 20.
EANZA was formed to promote cooperation among central banks by
providing intensive and systematic training courses for central bank
staffs
EANZA also provides an avenue for information exchange on issues
and problems of common interest among member economies
Original members were central banks from Australia, India, New
Zealand, Pakistan, and ri Lanka. The additions were Vangladesh;
People·s Republic of China; Hong Kong, China; Indonesia; Iran; Japan;
Republic of Korea; ëalaysia; ëacao, China; ëongolia; Nepal; Papua New
Guinea; Philippines; ingapore; and Thailand
) ;M0 '-
India had a total trade of about UD 13.8 billion with Australia in 2009-10 with exports from
India being of the order of UD 1.4 billion and with Imports being of the order of UD 12.4
billion
India's exports to Australia were IT and IT enabled services and other business services
India·s imports from Australia largely consist of gold, coking coal, copper ores, petroleum
and LNG, alumina, wool
Total foreign direct investment (FDI) inflows received from Australia during April 2000 to
November 2010 were UD 0.43 billion.
Top sectors attracted FDI from Australia are services sector, metallurgical industries,
telecommunications, automobile industry and consultancy services
A study indicates that an Australia-India FTA could result in a net increase in Australia's
GDP by up to $32 billion (AUD 45.5 billion) and India's GDP by up to $34 billion (AUD 48.3
billion) over a period of 20 years
India is fastest-growing major export market. It is Australia·s fourth-biggest export
market, up from 13th a decade ago
)$43M&0) )-
Australia²India Free Trade Agreement is estimated to have a beneficial impact on the GDP of both
economies. Vy 2020 Australia·s GDP is estimated to be 0.23 per cent higher than otherwise, and 0.15 per
cent higher in the case of India
The average applied Australian tariff in 2008 is a low 3.2, with nearly 52 per cent of tariff lines being
duty free.
The average applied tariff in India during 2008 is a relatively higher 17.6 per cent with nearly 3.7 per cent
of tariff lines being duty free.
India applies its ëFN tariff rate to Australian imports, while Australia applies its developing country tariff
rate to Indian imports. Hence Australia already affords India some tariff concessions relative to imports
from an ëFN country.
Australia benefits relatively more from the FTA reflects the trading relationship and magnitude of trade
barriers ³ India has higher trade barriers than Australia, and India is currently a more important
trading partner to Australia than Australia is to India
While Australia is estimated to benefit relatively more than India from the FTA, India benefits more in
absolute terms. Over the period 2010²30, Australia is estimated to gain A$43 billion in real GDP in (2008)
net present value terms, versus India·s real GDP gain of A$46 billion
2- !623'& --))
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70 per cent of Australian sectors and 68 per cent of Indian
sectors are expected to experience an increase in output
under the FTA.
Dynamic productivity gains, arising from greater import
competition, learning by doing in export markets and
greater foreign investment, are a key factor in seeing such
a high proportion of sectors benefiting under the FTA.
) ;M0 '
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India²New Zealand FTA- negotiating since 2007 with the
establishment of a JG (Joint tudy Group) looking at the
feasibility of an Indian-NZ FTA
New Zealand exports coal, timber, wool and hides to India. They
exported goods worth $652 million last year, an increase of 16
per cent, despite declining trade overall.
Indian exports are valued at $300 million
India is now New Zealand·s 13th largest export destination. New
Zealand had FTAs with ingapore, Thailand China and ëalaysia
India-New Zealand trade can grow four times to $4 billion in 10
years if a market-opening Free Trade Agreement is signed
2$-'3
4 2-) )2
India being predominantly an agrarian nation, concerns about New
Zealand·s entry into the agriculture and dairy sector still remain high
The realization that New Zealand has an economy just 10% the size of
India and that it does not compete in several major Indian agricultural
products such as rice and wheat, but instead had apples and kiwifruit
Also, New Zealand has just a 2% share of global milk production and
because most of its exports are in solid form and India is
overwhelmingly a liquid milk market it·s hardly a threat
New Zealand could contribute most is in India·s ´second green
revolutionµ that India·s political leaders, economists and the Indian
Planning Commission are trying to implement
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