India-Korea CEPA (Comprehensive Economic Partnership Agreement): From Initiation to Agreement

The Korean government has processed CEPA (Comprehensive Economic Partnership Agreement) with India.

Since the CEPA negotiation was initiated by the declaration at the India-Korea Summit in February 2006, twelve rounds of negotiation have taken place. In February 2009, India and Korea signed the Interim Agreement in New Delhi. By signing the India-Korea CEPA on 7 August 2009, the trade agreement was settled between India-Korea.

CEPA is different from FTA in the following way:

CEPA stands for Comprehensive Economic Partnership Agreement. As means literally, CEPA refers to a comprehensive type of FTA (Free Trade Agreement). While FTA stresses trade liberalization, CEPA underlines a wider range of economic exchanges in various fields including goods and services, trade, investment, and economic cooperation.

Meanwhile, the Korean government is processing SECA (Strategic Economic Comprehensive Agreement) with Mexico as well. This is another type of bilateral trade agreement. But unlike FTA, SECA allows market opening only in a limited number of areas. This type of bilateral agreement is generally preferred by the countries in South America, as this was regarded as an intermediary stage of reaching FTA. For instance, Mexico has transferred its SECA with Chile and Uruguay into Mexico-Chile and Mexico-Uruguay FTAs respectively.

India-Korea trade negotiation was finalized in the form of CEPA in respect of India’s request.

The expected impacts by India-Korea CEPA:

India-Korea CEPA is aimed at establishing institutional framework of bilateral relations in economic and trade fields. It is significant in two following aspects. First, CEPA will provide a stepping stone to establishing strategic partnership between India-Korea. India-Korea have a high degree of trade complementarity. While major Korean products exported to India are automobile components, mobiles and petro-chemical products, Korea imports basic materials from India such as naphtha, cotton thread and metal mineral.

Second, India is a market with a huge potential. India is the 4^th largest market after the US, China and Japan. It has the 2^nd largest population (1.1 billion) in the world and the PPP (Purchasing Power Parity) of GDP is as big as 3 trillion dollars. It is the 19^th important trade partner of Korea, and the trade volume between India-Korea is on the rapid increase. In this respect, India-Korea CEPA is expected to provide a stepping stone to prosperous relations between India-Korea.

Chronology of India-Korea CEPA

2006

7 February: Declaration of initiating CEPA negotiations at the Seoul Summit

2008

2-4 April: Inter-session Consultations of India-Korea CEPA (New Delhi)

29 May-2 June: 10^th Round of India-Korea CEPA (Seoul)

29 July-1 August: 11^th Round of India-Korea CEPA (New Delhi)

22-25 September: 12^th Round of India-Korea CEPA (Seoul) (tentative agreement)

23-25 November: 1^st Round of Legal Consultation of India-Korea CEPA (Seoul)

5-7 December: 2^nd Round of Legal Consultation of CEPA (New Delhi)

2009

9 February: Pre-signing of India-Korea CEPA (New Delhi)

7 August: Signing of India-Korea CEPA