India-Korea CEPA: Harvest deal by 2019 even as two nations stick to guns

With India taking a tough stand against giving Korea tariff lines that directly impacted its manufacturing, the two countries did not give up their stand on major items of contention. They, however, on Tuesday signed a joint statement upgrading negotiations under the Comprehensive Economic Partnership Agreement (CEPA) where they made early harvest offers for 35 items, each, while including yoga instructor and taekwondo instructors in the list of professionals under Sporting and other Recreational Services category. 

Korea has agreed for zero duty upfront for 15,000 tonne of shrimps which is India’s biggest marine export to that country. The total exports to Korea is around 24,000 tonne.

The two sides have also agreed to grant multiple entry visa to intra-corporate transferee of which validity period is three years or the contract period whichever is less. Residential permit would be commensurate with the validity period of the visa. 

Minister for trade of the Republic of Korea Hyun Chong Kim and Union commerce minister Suresh Prabhakar Prabhu signed the statement after tough negotiations that lasted more than two days. 

India agreed to give phased duty reduction for three broad categories of Korean imports spreading over 10-15 years, including in base oil. Koreans, in turn, will reduce duties in equal 8-10 annual instalments. Thirty per cent duty on beer made from malt, for instance, would be phased out by the eighth year. On castor oil and its fractions, 5 per cent duty would be done over 10 years.

In services, the agreement was achieved and implementation would be subject to statutory approvals would be taken. Yoga instructors from India and taekwondo teachers from Korea would be able to travel easily.

Under CEPA, professional means a natural citizen who is employed in a specialised occupation that requires theoretical and practical application of specialised knowledge and attains post-secondary degree in the specialty requiring three or more years of study (or the equivalent of such a degree) as a minimum of entry into the occupation. 

The two countries agreed to finalise the CEPA upgrading negotiations at the earliest date in 2019. 

There was agreement on the principle that the two countries should avoid a general decrease in the level of liberalisation commitments attained in the existing CEPA. Both countries, however, would “strive towards achieving additional liberalization by upgrading CEPA in such a way that reflects the various interests and sensitivities of each side”.

India has a $12-billion trade deficit with Korea which would have further widened if India gave 17 open lines on trade that their visiting delegation was asking.

Korea, however, did not give the status of ‘native English speaking nation’ to India, though it had accorded this to some other countries, including South Africa. The status would have opened up an E2 visa for Indians.

India had asked for zero duty on items like sesame while Koreans were seeking relaxation on motor parts. South Korea imposes 630 per cent duty on Indian sesame while importing  24,000 tonnes a year from China at zero duty.