What is the Free Trade Agreement, Comprehensive Economic Cooperation Agreement/Partnership Agreement?

FTA stands for Free Trade Agreement; PTA stands for Preferential Trade Agreement; CECA stands for Comprehensive Economic Cooperation Agreement while CEPA is an acronym for Comprehensive Economic Partnership Agreement.

India has economic agreements with the rest of Countries of the world signed Free Trade Agreements (FTA) / Preferential Trade Agreements/ Comprehensive Economic Cooperation Agreements (CECA) and Comprehensive Economic Partnership Agreements (CEPA).

       India is no exception  and  both CECA and CEPA are forms of economic agreements between India and other countries such as Malaysia, Singapore, and Thailand (for CECA) and Japan, Sri Lanka, and South Korea (for CEPA).

  CECA and CEPA both are economic agreements and are subject to the benefit of both countries, especially on the economic and trading side.

From the actual name itself, the most obvious difference is the use of the word “cooperation” in the former and “partnership” in the latter. “Cooperation” denotes a loose connection between two countries while the word “partnership” denotes a more personal and more intense relationship between the parties.

In looking at the big picture, CEPA is much broader and more complicated compared to CECA. CECA is mainly concerned with tariff reductions and the elimination of all items that are considered to be listed tariff rate quota items.

     On the other hand, CEPA has the same components as CECA with an additional focus and options in the terms of trade investments and services.

In a comparable economic standing, CECA is considered the first step or a stepping stone to accomplish CEPA. If negotiations can still be conducted between countries, and both parties are open to discussion and have a good economic relationship with each other, CECA can evolve into CEPA. This makes CEPA a result of ongoing efforts and negotiations of two countries that started from CECA.

FTA stands for free trade agreement. FTA has no mention of other areas of cooperation- It only reduces custom duties on agreed items to zero level. Though FTA/CEPA are economic pacts, there is a difference between the two. Unlike FTA which is a free trade agreement, CEPA aims at lowering trade barriers instead of complete elimination and covers large areas of cooperation beyond trade such as investment, economic assistance, and technology cooperation.

PTA trade pact between countries that reduces tariffs for certain products to the countries who sign the agreement. While the tariffs are not necessarily eliminated, they are lower than countries not party to the agreement. It is a form of economic integration.


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