India - Japan CEPA

A number of issues in the proposed India-Japan comprehensive economic partnership agreement (CEPA) are yet to be resolved, including items in the negative list of products to be shielded from tariff cuts and quality control norms for import of farm goods.The two sides are, however, keen on putting the negotiations on the fast track in the joint meeting next week, especially since Prime Minister Manmohan Singh is scheduled to visit Japan later this month. Sources said efforts would be made to sort out sticky issues in the negotiations next week, so that an announcement on the signing of the agreement could be made during the visit. With the negotiations on the Asean-India free trade agreement concluded and the India-South Korea CEPA sorted out, the country’s bilateral pact with Japan will be the third trade deal clinched by the UPA government. The CEPA will include a free trade agreement in goods and services and a liberalised investment regime. Both sides want to increase bilateral trade from the existing $7.5 billion to $20 billion by 2010. Commerce secretary G K Pillai will head the team of officials in the three-day negotiations beginning October 7. The PM will visit Japan during October 21-23.According to Japanese government officials, automobile and chemicals are the two sectors the Japanese industry is keen to explore in India. However, these are the areas where the Indian industry is seeking total protection. In fact, India has included the two items in the proposed negative list of items for the CEPA. “These are the areas which need to be sorted out,” the official said. India, on the other hand, is keen on expeditious implementation of quality norms in Japan. Industry sources said the implementation process of sanitary & phytosanitary norms in Japan is so long that in certain cases, like mangoes, it took 15 years for India to get clearance. The Japanese, however, have another side to the story. “In the case of mangoes, it took so long because India took long to give us the information that we were seeking. We will certainly look at expediting the process of quality control, but India, too, has to be fast in providing information that we seek,” the Japanese official said. Rules of origin, which lay down how much of an imported input should be allowed in a product being traded under the CEPA, is another contentious area. Japan wants the norm to be more relaxed for certain products like textile. India is backing stronger norms as it does not want third-party goods to come into the country at concessional import duties allowed under the CEPA. “It will be difficult to sort out so many issues in next week’s meeting, but we will try our best,” an Indian government official said. The two countries want the agreement to be signed by December this year.

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