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India and MERCOSUR – a trading bloc in Latin America consisting of Argentina, Brazil, Paraguay and Uruguay, with Bolivia and Chile as its associate members – have signed an Agreement to operationalise the Preferential Trade Agreement (PTA) between the two sides here this evening. The aim of the Agreement, which operationalises the PTA which was signed in New Delhi in January last year, is to expand and strengthen the existing relations between MERCOSUR and India and to promote the expansion of trade by granting reciprocal fixed tariff preferences with the ultimate objective of creating a free trade area between the parties. The Agreement was signed by Shri Kamal Nath, Union Minister of Commerce & Industry, on behalf of the Government of India; and on behalf of MERCOSUR by Mr. Celso Amorim, Minister of External Relations & International Trade of Brazil; Ms. Leila Rachid de Cowles, Minister of External Relations of Paraguay; Mr. Ernesto Agazzi, Vice Minister of Livestock, Agriculture & Fisheries of Uruguay; and Mr. Alfredo Chiradia, Secretary of State of Commerce & International Economic Relations of Argentina.
India-MERCOSUR PTA of last year provided for several annexes to the Agreement. These annexes have been finalized in the Agreement signed today to operationalise the PTA. They cover 450 products at 8-digit level on which India has given tariff preferences and 452 products on which MERCOSUR has given tariff preferences; tariff concessions ranging from 10% to 100%; Rules of Origin providing for 60% value-addition; and safeguard measures and dispute settlement procedures available to members on fast-track which will be in addition to the redressal mechanisms available in the World Trade Organisation (WTO).
India had a total trade of nearly US $ 1.5 billion with the MERCOSUR during the calendar year 2004. India’s exports to MERCOSUR were approximately US $ 566.96 million during 2003-04 and imports from MERCOSUR were around US $ 849.69 million during the same period. The region still has a huge potential for Indian exports as India’s share is just 0.83% of the global imports of MERCOSUR. India’s major items of exports to MERCOSUR are drugs, pharmaceuticals and fine chemicals, transport equipment, inorganic/organic/agro chemicals, cotton and cotton manmade fabrics, made-ups, readymade garments, dyes, intermediates and coal tar. The major imports into India from MERCOSUR are edible oils (primarily soya), metaliferrous ores, metal scrap and non-electrical machinery.
Background
MERCOSUR was formed in 1991 with the objective of facilitating the free movement of goods, services, capital and people among the four member countries. MERCOSUR has become a successful market of about 200 million people, representing about 1 trillion dollars of GDP and 190 billion dollars of trade. It is the fourth largest integrated market after the European Union (EU), North American Free Trade Agreement (NAFTA) and ASEAN.
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SB/MRS
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