Type of Trade Agreements – UPSC Prelims

Free Trade Agreement (FTA):
  • A free trade agreement is an agreement in which two or more countries agree to provide preferential trade terms, tariff concession etc. to the partner country.
  • India has negotiated FTA with many countries e.g. Sri Lanka and various trading blocs as well e.g. ASEAN.
Preferential Trade Agreement (PTA):
  • In this type of agreement, two or more partners give preferential right of entry to certain products. This is done by reducing duties on an agreed number of tariff lines.
  • Tariffs may even be reduced to zero for some products even in a PTA. India signed a PTA with Afghanistan.
Comprehensive Economic Partnership Agreement (CEPA):
  • Partnership agreement or cooperation agreement are more comprehensive than an FTA.
  • CEPA covers negotiation on the trade in services and investment, and other areas of economic partnership.
  • India has signed CEPAs with UAE, South Korea and Japan.
Comprehensive Economic Cooperation Agreement (CECA):
  • CECA generally covers negotiation on trade tariff and TRQ (Tariff Rate Quotas) rates only. It is not as comprehensive as CEPA. India has signed CECA with Malaysia.

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