1. Home
  2. Blog
  3. UPSC

Economic Pact between India and EFTA States


Why is it in the news?

  • Trade and Economic Partnership Agreement (TEPA) negotiations between India and EFTA face obstacles as Switzerland raises concerns, causing a logjam in the trade deal talks.

More about the news

  • The negotiations for the Trade and Economic Partnership Agreement (TEPA) between India and the European Free Trade Association (EFTA) commenced in 2008 and experienced a hiatus before resuming in 2016.
  • Recent negotiations encompass a comprehensive range of topics, including trade in goods and services, rules of origin, Intellectual Property Rights (IPR), trade and sustainable development, sanitary and phytosanitary measures, technical barriers to trade, trade remedies, and customs and trade facilitations.
European Free Trade Association (EFTA)

路聽聽聽聽聽聽 EFTA is an intergovernmental organization consisting of Iceland, Liechtenstein, Norway, and Switzerland. Established in 1960, its primary goal is to promote free trade and economic integration among its member states.

路聽聽聽聽聽聽 In 2022, the combined EFTA-India merchandise trade surpassed USD 6.1 billion. Notable imports to the EFTA States included organic chemicals (27.5%), while machinery (17.5%) and pharmaceutical products (11.4%) constituted the main exports to India.

Significance of TEPA

  • The EFTA states rank 10th globally in merchandise trade and 8th in services trade, highlighting the significant market potential.
  • Recognizing the importance of reducing dependency on a few key trading partners, TEPA aims to mitigate risks associated with economic fluctuations in specific regions.
  • A key component of trade agreements involves the reduction or elimination of tariffs on goods traded between participating countries. This strategic move can make Indian goods more competitive in EFTA markets, potentially boosting exports.
  • EFTA companies excel in various sectors, including pharmaceuticals, biotechnology, machinery manufacturing, R&D-driven technology products, geothermal-related technologies, marine technology, energy-related services, financial services, banking, and insurance.
  • TEPA’s positive business environment can attract foreign direct investment by providing stability and predictability for investors.
  • EFTA has a successful track record of negotiating mutually beneficial trade agreements, boasting an extensive network of 29 free trade agreements (FTAs) with 40 partner countries.

Concerns

  • Harmonizing standards related to product quality, safety, and environmental regulations is crucial for smooth trade. Any differences may lead to additional compliance costs for businesses.
  • Agreement on standards and enforcement mechanisms for patents, copyrights, trademarks, and other intellectual property issues is essential for a successful TEPA.
  • Concerns may arise if obstacles to the free flow of services or restrictions on foreign investment in certain sectors are not adequately addressed.
  • Ensuring that the trade deal includes provisions for maintaining or improving labour rights and environmental protections is crucial for sustainable and ethical trade practices.

Conclusion

  • The potential benefits of a TEPA between India and EFTA states are significant. It fosters a strong partnership and increases trade between trusted democratic partners that share values such as promoting sustainable development and gender equality.
  • EFTA and India are committed to making these trade talks a priority, aiming for a swift process towards a balanced agreement with strong political involvement and guidance.

Get free UPSC Updates straight to your inbox!

Get Updates on New Notification about APPSC, TSPSC and UPSC

Get Current Affairs Updates Directly into your Inbox

Discover more from AMIGOS IAS

Subscribe now to keep reading and get access to the full archive.

Continue reading