Proposal for CEPA with MERCOSUR and SACU:
The proposal for a Comprehensive Economic Partnership Agreement (CEPA) between India and the two separate customs unions – MERCOSUR and SACU respectively – to boost trade and investment ties, likely to accord it priority at the forthcoming IBSA Summit.
Agenda of sixth IBSA Summit:
The agenda at the sixth IBSA (India, Brazil, South Africa) Summit – likely to be held in India in mid-2017 – would be the three IBSA members enhancing contribution to the ‘IBSA Fund’ to support more developmental projects across the world.
The summit could also see the three major emerging market economies strengthening trilateral cooperation on renewable energy projects.
On trade, India has a Preferential Trade Agreement (PTA) with MERCOSUR and both the sides are looking to expand its coverage.
Negotiations on way:
India is also negotiating a PTA with Southern African Customs Union (SACU). A PTA between MERCOSUR and SACU had become operational from April this year.
Significance of CEPA:
The proposal for an India – MERCOSUR – SACU CEPA is to expand the scope of the PTAs from just trade in goods and then convert them into a comprehensive agreement that will also cover investments, trade in services and areas including intellectual property rights and competition laws among others.
Trade account of IBSA:
Intra-IBSA trade (export and import) in 2012 was about $50.5 billion, which was only 3.4 per cent of their total trade with the rest of the world.
About IBSA Fund:
On the IBSA Fund, the three IBSA member-nations had in March 2005 agreed that each of them will pitch in with an annual contribution of $1 million to the Fund.
The Fund had received contributions of only about $18 million, adding that the aim was to enhance it soon to $40 million to assist 25 projects every year, especially in least developed countries.
Accomplished projects out of IBSA fund:
The projects completed by the IBSA Fund include those in Burundi (combating HIV/AIDS), Palestine (sports promotion and rehabilitation of cultural/hospital centre), Sierra Leone (human development and poverty reduction), Cape Verde (health care infrastructure, drinking water), Guinea-Bissau (agriculture development), Haiti (solid waste collection), Cambodia (empowering people with special needs) and Vietnam (rice production).The IBSA Fund also supported Laos in the formulation of projects and Timor-Leste through a technical exchange.
What is the Customs Union?
A customs union is a type of trade bloc which is composed of a free trade area with a common external tariff. The participant countries set up common external trade policy, but in some cases they use different import quotas.
What is SACU?
SACU is the oldest existing customs union in the world. It was established in 1910 pursuant to a Customs Union Agreement. With the advent of independence of territories, the agreement was updated and it was re launched as the SACU with the signing of an agreement between the Republic of South Africa, Botswana, Lesotho and Swaziland. After Namibia’s independence from South Africa in 1990, it joined SACU as its fifth member.
What is MERCOSUR?
Mercosur is a sub-regional bloc. Its full members are Argentina, Brazil, Paraguay, Uruguay and Venezuela (who was suspended on December 2016).