Comprehensive Economic Partnership Agreement
The Comprehensive Economic Partnership Agreement (CEPA) is a free trade agreement between India and South Korea. The agreement was signed on August 7, 2009. The signing ceremony took place in Seoul and the agreement was signed by the Indian Commerce Minister, Anand Sharma and South Korean Commerce Minister, Kim Jong-Hoon. The negotiations took three-and-a-half years, with the first session being held in February 2006. The agreement was passed in the South Korean parliament on 6 November 2009. It was passed in the Indian parliament the next week. Once passed, the agreement came into effect sixty days later. As per the agreement South Korea will cut tariffs on 93% on goods from India. India will cut 75% of total tariffs. It is equivalent to a free trade agreement. The agreement will provide better access for the Indian service industry in South Korea. Services include Information technology, engineering, finance, and the legal field. South Korean car manufactures will see large tariffs cuts to below 1%. All the while, Korean corporations have flooded India with cheaper imports of raw metal, steel and finished products.
The agreement will ease restrictions on foreign direct investments. Companies can own up to 65% of a company in the other country. Both countries avoided issues over agriculture, fisheries, and mining and choose not to decrease tariffs in those areas. This was due to the very sensitive nature of these sectors in the respective countries. Trade between India and South Korea was $15.6 billion in 2008. This is a major increase from 2002, when the total trade amount was $2.6 billion. The Korea Institute for International Economic Policy believes the agreement will increase trade between the two countries by $3.3 billion. The act came into force on January 1, 2010.
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