With which of the following countries India does not have a functional Free Trade Agreement or Comprehensive Economic Partnership?
Canada
Understanding India's Trade Agreements (FTA and CEP)
India engages in various trade agreements with countries around the world to facilitate commerce, reduce trade barriers, and boost economic cooperation. These agreements can take different forms, including Free Trade Agreements (FTAs) and Comprehensive Economic Partnerships (CEPs).
What are FTAs and CEPs?
- Free Trade Agreement (FTA): An agreement between two or more countries to reduce or eliminate tariffs and other trade barriers on most goods and services traded among them.
- Comprehensive Economic Partnership (CEP): A broader agreement than an FTA, often covering trade in goods, services, investment, competition policy, and other areas of economic cooperation.
Analysing India's Trade Pacts with the Given Countries
Let's look at India's current functional trade agreements with the countries mentioned in the options:
- South Korea: India and South Korea signed a Comprehensive Economic Partnership Agreement (CEPA) which became effective from January 1, 2010. This is a functional agreement.
- Japan: India and Japan signed a Comprehensive Economic Partnership Agreement (CEPA) which came into force on August 1, 2011. This is also a functional agreement.
- Chile: India and Chile have a Preferential Trade Agreement (PTA) which was initially signed in 2006 and expanded later. While not a full FTA or CEP, a PTA is a step towards reducing tariffs and is a functional trade arrangement. Some sources also refer to discussions or plans for a broader agreement. However, compared to the others, the PTA is the primary functional trade arrangement. For the context of this question distinguishing between countries with *some* functional agreement and those without, Chile has a functional PTA.
- Canada: India and Canada have been negotiating a Comprehensive Economic Partnership Agreement (CEPA) for several years. However, as of late 2023 and early 2024, these negotiations have faced suspensions and have not resulted in a functional, fully implemented Free Trade Agreement or Comprehensive Economic Partnership. Therefore, India does not have a functional FTA or CEP with Canada currently.
Identifying the Country Without a Functional Agreement
Based on the status of trade agreements, India has functional trade agreements (CEPA/PTA) with South Korea, Japan, and Chile. India does not have a functional Free Trade Agreement or Comprehensive Economic Partnership implemented with Canada.
| Country | Status of Trade Agreement with India (Functional FTA/CEP/PTA) |
|---|---|
| Canada | Negotiations ongoing but no functional FTA or CEP implemented |
| South Korea | Functional CEPA in effect |
| Japan | Functional CEPA in effect |
| Chile | Functional PTA in effect (often considered a step towards FTA) |
Therefore, the country among the options with which India does not have a functional Free Trade Agreement or Comprehensive Economic Partnership is Canada.
Revision Table: Key India Trade Pacts
| Agreement Type | Example with India | Key Feature |
|---|---|---|
| Free Trade Agreement (FTA) | India-ASEAN FTA | Eliminates/reduces tariffs on most goods/services. |
| Comprehensive Economic Partnership (CEP / CEPA) | India-South Korea CEPA, India-Japan CEPA | Broader scope than FTA, includes services, investment, etc. |
| Preferential Trade Agreement (PTA) | India-Chile PTA | Reduces tariffs on a limited list of goods. |
Additional Information on India's Trade Relations
- India is actively pursuing various trade agreements to enhance its global economic integration.
- Key ongoing negotiations include agreements with the UK and the EU.
- Trade agreements aim to boost exports, attract investment, and create economic opportunities.
- The specifics and depth of trade agreements can vary significantly between countries.
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