Difference between FTA & CEPA

Introduction

FTA and CEPA are economic pacts between countries aimed at reducing tariffs and improving bilateral trade. FTA stands for Free Trade Agreement, while CEPA stands for Comprehensive Economic Partnership Agreement. In this article, we will highlight the differences between the two.

FTA vs CEPA

– FTA is a free trade agreement, while CEPA aims at lowering trade barriers instead of eliminating them completely.
– India recently signed a CEPA with South Korea, which is expected to improve trade volume and reduce the trade imbalance between the two countries.
– Unlike the FTA between the US and EU, which aims to eliminate trade barriers within five years, CEPA aims to gradually reduce import duties from 12.5% to 1% over the next eight years.
– Critics argue that the slow moving CEPA is not preferable to a full-fledged FTA, but officials involved in the CEPA with South Korea claim it is an enhanced version of FTA.
– CEPA covers trade in goods, services, investments, and economic cooperation, and includes a dispute settlement mechanism.
– Officials refute the notion that CEPA is a diluted version of FTA, stating that bilateral negotiations require compromises but there is always room for future talks.

In brief:

– India and South Korea recently signed a CEPA.
– CEPA is a diluted version of FTA.

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Key Takeaways

1. FTA and CEPA are terms used to describe economic pacts between countries aimed at reducing tariffs and improving bilateral trade.
2. CEPA aims at lowering trade barriers instead of complete elimination, unlike FTA.
3. CEPA between India and South Korea is said to be a diluted version of FTA.