Chile is looking to expand its trade basket with India and include digital services in the Comprehensive Economic Partnership Agreement (CEPA) between the two countries. This topic is relevant for the UPSC exam international relations as well as economy sections.
Comprehensive Economic Partnership Agreement between India and Chile
A Preferential Trade Agreement (PTA) was signed between India and Chile in 2006 and expanded in 2017. The two countries signed an agreement to avoid double taxation in March 2020. Significantly, Chile was the first country in South America to sign a trade agreement with India, in 1956.
Significance of Chile for India
- Geopolitical:
- Chile is strategically located in the Pacific Rim, making it an important player in the region’s geopolitics.
- It has a strong presence in multilateral organizations like the United Nations and the World Trade Organization, which can help India in its diplomatic efforts.
- Geo-economic:
- Chile is India’s fourth-largest trading partner in the Latin American and Caribbean region, with bilateral trade worth over $3.5 billion in 2020.
- Chile is rich in natural resources, including copper and lithium, which India can import to meet its industrial needs.
- Chile is also interested in collaborating with India in the agriculture and allied sectors, particularly in the areas of fruits, vegetables, and wines.
- Chile has free trade agreements with 64 economies in the world and is looking to primarily target service sector companies from Chile or India.
- Chile is also a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement between 11 countries, which can help India expand its economic ties in the region.
- Security:
- Chile has a stable political system and a relatively low level of crime, making it a safe destination for Indian businesses and tourists.
- It has a strong military and has been actively involved in peacekeeping operations around the world, which can contribute to regional stability.
- Chile is also an important partner in India’s efforts to counter terrorism and promote cybersecurity.
- A Comprehensive Economic Partnership Agreement (CEPA) is a free trade agreement between two or more countries.
- It aims to liberalize trade in goods and services, reduce non-tariff barriers, and promote investment between the signatory countries.
- CEPA covers a wide range of sectors, including agriculture, manufacturing, services, and intellectual property.
- The agreement also includes provisions on rules of origin, trade remedies, technical barriers to trade, and customs procedures.
- The negotiations for a CEPA can take several years and may involve multiple rounds of talks between the countries involved.
- Once the agreement is signed, it is expected to boost economic growth, create jobs, and increase trade and investment flows between the signatory countries.
- CEPA is seen as a stepping stone towards a more comprehensive and integrated economic partnership, such as a free trade area or a customs union.
Conclusion: India and Chile are seeking to expand their trade relations beyond agriculture and goods to include digital services and investment under the Comprehensive Economic Partnership Agreement. With growing market potential and interest in the lithium industry, both countries have a lot to offer each other in terms of economic and technological advancement.
India – Chile CEPA:- Download PDF Here
| Related Links | |||
| Lithium deposits in India | World Economic Forum | ||
| India – China relations | India’s Foreign Policy | ||
| ASEAN | Regional Comprehensive EcoÂnoÂmic Partnership | ||
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