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Comprehensive Economic Cooperation Agreement between The Republic of India and the Republic of Singapore (CECA)


Comprehensive Economic Cooperation Agreement between The Republic of India and the Republic of Singapore (CECA)

Answer: The objectives of this Agreement are: (a) to strengthen and enhance the economic, trade and investment cooperation between the Parties; (b) to liberalise and promote trade in goods in accordance with Article XXIV of the General Agreement on Trade and Tariffs; (c) to liberalise and promote trade in services in accordance with Article V of the General Agreement on Trade in Services, including promotion of mutual recognition of professions; (d) to establish a transparent, predictable and facilitative investment regime; (e) to improve the efficiency and competitiveness of their manufacturing and services sectors and to expand trade and investment between the Parties, including joint exploitation of commercial and economic opportunities in non-Parties; (f) to explore new areas of economic cooperation and develop appropriate measures for closer economic cooperation between the Parties; (g) to facilitate and enhance regional economic cooperation and integration, in particular, to form a bridge between India and the Association of Southeast Asian Nations (“ASEAN”) region and serve as a pathfinder for the India-ASEAN free trade agreement; and (g) to build upon their commitments at the World Trade Organization.
Answer: (A) Singapore’s Offer: Singapore has zero customs tariff on all tariff lines except for six products. Singapore has agreed to bind all their tariff lines at zero customs duty for India. (B) India’s Offer: The key sectors in which India offered tariff concessions include electrical and electronics, instrumentation, pharmaceuticals and plastics. India’s offer has been categorized into four lists, Early Harvest, Phased Elimination, Phased Reduction and the Negative List. Negative List products, whether originating or otherwise, will enter into India from Singapore on the applied MFN duties. An additional list of tariff concessions was released on 15 January, 2008. Under the agreement, goods such as base metal, machinery and mechanical appliances, chemicals, plastic and rubber articles and textiles and textile articles will enjoy reduced tariffs. Early Harvest Program Singapore eliminated all customs duties on all goods originating from India as specified by the rules of origin effective August 1, 2005. A total of 506 tariff lines of Indian goods listed in the EHP were eliminated upon entry into force of the Agreement. The largest number of tariff lines in the EHP belongs to HS Chapter 85, Singapore’s second largest category of exports to India. Phased Duty Elimination Tariffs on originating goods provided in the list for phased elimination were gradually eliminated in five stages beginning from August 1, 2005. A total of 2,202 items entered India duty free as of April 1, 2009, including 231 items in HS Chapter 84, 57 items in HS Chapter 85, and 21 items in HS Chapter 87. The Margin of Preference offered by India has been indicated in the List. Phased Duty Reduction Tariffs on originating goods provided in the list for phased duty reduction were gradually reduced in five stages beginning from August 1, 2005. A total of 2,413 items entered India at concessional rates from August 1, 2005 to April 1, 2009, including 525 items under HS Chapter 84, 373 items under HS Chapter 85, and 7 items under HS Chapter 87. The Margin of Preference offered by India has been indicated in the List. Exclusion from any Concession of Duty No concessions in duties shall be offered on goods provided in this list, such goods whether originating or otherwise, shall enter into India from Singapore on the applied MFN duties. Margin of Preference Margin of Preference (MOP) offered by India to Singapore on specific products, shall be calculated on the Most Favoured Nation (MFN) import duty applicable on the date of import. For example, if the MFN duty on a particular product is 20%, and India offers a MOP of 10% to Singapore, the duty reduction for import from Singapore will become 20% - (10% of 20%) = 2% Hence, the applicable rate of duty for that particular originating product coming from Singapore will be 20-2 = 18%. If the MOP of 100% is offered to Singapore, then such originating goods shall receive duty free entry into India from Singapore. During the review of CECA in December 2007, India made a fresh commitment to offer tariff concessions on 539 additional items. Some of these items were kept in the negative list earlier- articles of base metals, textiles, machinery and mechanical appliances, chemicals, plastic, rubber and textile articles. At the end of this, 93% of India’s imports from Singapore will be under reduced tariffs.
Answer: India-Singapore CECA is reviewed from time to time. The first review was concluded on 1st October 2007. The 2nd Review of India-Singapore CECA was launched by the Commerce & Industry Minister, India on 11th May, 2010. The Secretary level meeting of the 2nd Review was held in Singapore on 3rd August, 2010. Thereafter, Working Group meetings on Goods and Services & Investment were held time to time, with the last meeting held in Singapore in September 2011.
Answer: Singapore has only 6 tariff lines which are not at zero duty but under the FTA it has bound all lines at zero duty. India’s tariff categories include the early harvest programme (immediate elimination); phased elimination of duty; phased reduction of duty and products excluded from duty cuts (negative lines).
Answer: India’s negative list lines are primarily under the product categories of fruits and vegetables, spices, plantation crops, vegetable fats and oils, processed foods, mineral products, plastics and rubber, textiles and clothing, stones, glass and ceramics, base metals, automotives and miscellaneous manufactured articles.
Answer: The mutual recognitions agreement will eliminate duplicate testing and certification of products in specific sectors, and facilitate bilateral cooperation in several sectors. CECA provides a framework for concluding Mutual Recognition Agreements (MRAs) to eliminate duplicate testing and certification of products to facilitate entry of goods for sale in the respective markets. These sectoral MRAs serve to reduce costs and shorten time to market. This is especially useful for products with short life cycle. Two sectoral annexes for trade in electrical and electronic products and telecommunication equipment were concluded under the framework chapter. For products in these two sectors, testing and certification to Indian standards and technical regulations can be done at source. They do not have to be further tested or re-certified on arrival in the market. As most of these products have relatively short life cycles, the result is a reduction in relative cost and improved time to market competitiveness of Singapore certified products entering the Indian market and vice versa. Of immediate benefit is the food sectoral Annex wherein Singapore has facilitated the import of egg products, dairy products and packaged drinking water from India. This will widen the sources of supply for these food products in Singapore.
Answer: Only those goods that have at least 40% content value originating from within the exporting country will be eligible for benefits under CECA. The specifics of the Rules of Origin are important to consider in this case. The three criteria for ROO: 1. Fixed level of minimum value addition from the originating country was agreed to be at 40% of the freight-on-board value, 2. Change of tariff heading (CTH) at the 4-6 digit level as per WTO’s Harmonised System code that defines the product 3. Specifications of the kind of value addition According to the Harmonised System code method, “origin is given to an exported product if it falls into a tariff classification that is not the same as that of the imported inputs used in its production”. So, the exported good under CECA either has to be wholly manufactured in Singapore, or re-processed/ packaged in such a way that it becomes a completely different item under the HS classification along with a minimum 40% value addition in Singapore. However, Singapore has kept a list of 500 products under alternative ROO, called product specific rules which are different from the general rules. These items, which Singapore considered ‘sensitive’ items for its economy, include cocoa butter, soya sauce, sewing machines, and static converters among others. The list also includes computers, software, and related goods which have constituted about 10% of Indian imports from Singapore over the last few years10.
Answer: At present there are no non-tariff measures on importation of any goods of the other Party or on the exportation of any goods destined for the territory of the other Party except in accordance with its rights and obligations under the WTO Agreement. Each Party shall ensure that such measures are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to trade between the Parties.
Answer: Each Party shall determine the customs value of goods traded between them in accordance with the provisions of Article VII of the GATT 1994 and the WTO Agreement on Implementation of Article VII of the GATT 1994.
Answer: The general exceptions mentioned in GATT 1994 are applicable to the parties concerned. The measures are: (a) necessary to protect public morals or to maintain public order; (b) necessary to protect human, animal or plant life or health; (c) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Chapter including those relating to: (i) the prevention of deceptive and fraudulent practices to deal with the effects of a default on a contract; (ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts; (iii) safety; (d) imposed for the protection of national treasures of artistic, historic or archaeological value; (e) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption. Along with this the agreement also spells out certain restrictions. They include the following: a) Measures for the protection of its essential security interests to protect critical public infrastructure including communications, power and water infrastructure from deliberate attempts to disable or degrade such infrastructure b) Protections of essential security interests with respect to a non-party or goods or service suppliers of a non-party or investors. c) Preventing a Party from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.
Answer: Chapter 4 of the CECA deals with the customs procedures. There are many positive rules on transparency for exporters which are laid down in Article 4.2 of CECA. All relevant information related to export and import should be made accessible to the interested parties. Each Party shall designate or maintain one or more inquiry points to address inquiries by interested persons concerning customs matters and shall make available on the Internet information concerning the procedures for making such inquiries. The revised custom laws and regulations should be made available in advance. The information related to specific customs matters should be available to the interested parties quickly and accurately. To the extent possible, each Party shall publish in advance any regulations of general application governing customs matters that it proposes to adopt and provide interested persons with the opportunity to comment prior to their adoption. No party would publish law enforcement procedures and internal operational guidelines including those related to conducting risk analysis and targeting methodologies.
Answer: The Agreement on Anti-dumping and the Agreement on Subsidies and Countervailing Measures is applicable in anti-dumping issues and for countervailing duties respectively.
Answer: Each Party retains its rights and obligations under Article XIX of GATT 1994 and the WTO Agreement on Safeguards. This Agreement does not confer any additional rights or impose any additional obligations on the Parties with regard to actions taken pursuant to Article XIX and the Agreement on Safeguards, except that a Party taking a safeguard measure under Article XIX and the Agreement on Safeguards may, to the extent consistent with the obligations under the WTO Agreements, exclude imports of an originating good from the other Party if such imports are not a substantial cause of serious injury or threat thereof.
Answer: The CECA includes an enhanced Double Taxation Avoidance Agreement (DTAA) between Indian and Singapore. The previous treaty on double taxation was signed in January 1994. The improved version under CECA “provides for avoidance of double taxation of income earned in one Contracting State by a resident of the other and makes clear the taxing rights between the two Contracting States.” Most importantly, tax residents in Singapore will no longer have to pay capital gains tax to India on profits proceeding from sale of shares in India. Since Singapore in any case does not impose capital gains tax, Singaporean investors face no tax for their investments in securities in India. In combination with previously discussed steps to promote investments, the improved.
Answer: The Trade in Services Chapter provides the general principles for trade in Services between both the countries. It has been decided that all Juridical Persons registered in Singapore or India would be included under CECA irrespective of ownership or control. However, a special carve out has been agreed for, Education, Audiovisual, Telecommunication and Financial Service sectors.
Answer: Regarding the Financial Services in this Chapter, it has been decided that the requirement for ownership and/or control by persons of India and/or Singapore shall be required for a period of four years. After this period, there would be a review and there shall be no automatic cessation of this requirement. In the Schedule of commitments for Financial Services sector, India has offered commitments allowing 28% foreign equity for Life and Non-life insurance. It has also been agreed to allow three Singaporean banks viz., Development Bank of Singapore Holdings, United Overseas Bank Limited and Overseas Chinese Banking Corporation Limited to incorporate one insurance company, provided none of them individually or collectively hold more than 26% equity. Under Banking, the three Singaporean Banks mentioned above have been allowed to establish 15 branches in four years. India has also agreed to commit to Singapore the FDI limit of 74% in banking, both FDI and FII put together, subject to the limitation of ‘one mode of presence’. India has agreed to accord to accord the same treatment to wholly owned subsidiaries of Singaporean banks as it does to its banks on branching, places of operation and prudential requirements. Asset managers established in India or Singapore and offering mutual funds to investors in India have been permitted to invest US $ 250 million in equities and instruments in the Singapore Stock Exchange, over and above the existing cap of US $ 1 billion allowed for all mutual funds put together. Singapore has also agreed to grant Qualified Full Banking privileges to three Indian banks with or without operations in Singapore. This would provide better market access to our banks in Singapore.
Answer: The India Singapore CECA has two chapters that are related to the trade in services. Chapter 7 related to Trade in Services while Chapter 9 relates to Movement of Natural Persons. Both countries have undertaken commitments under various sectors including the movement of various categories of natural persons.
Answer: Singapore has undertaken full commitments in Professional Services like Accounting Auditing, Bookkeeping services, Taxation Services, Architectural Services, landscape Architectural Services, Dental Services, Veterinary Services, Services provided by midwives, nurses, physiotherapists and para-medical personnel as well as Computer related services, Research and Development Services, Advertising Services, Market research and public opinion polling services, Management consulting services, including office management and administrative services, Building cleaning services, Photographic services, Construction and related Engineering services and Telephone answering services. Partial commitments have been undertaken in telecommunication services and mobile services.
Answer: In the case of movement of natural persons, short term temporary entry has been committed in the following categories – Business Visitors (5 year multiple journey visa) and Short term service suppliers (for a maximum period of 6 months). Business visitors going into Singapore from India for negotiating of deals, market exploration may apply for a multiple journey visa up to a validity period of 5 years provided the relevant terms and conditions apply. Long term temporary entry is granted to Intra Corporate Transferees (upto a maximum period of 8 years) and Professionals (upto a maximum period of one year). A list of 127 professionals (Annex 9-A of the Agreement) have been covered including Interior Architect to Lift Engineer to a Botanist and a Zoologist. Intra-corporate transferees refers to personnel from businesses operating in both countries and requires the transfer of personnel like managers, technical expertise between the two establishments. They can apply for a visa with validity period up to 2 years with possible extensions of up to 3 years at one time upto a maximum of 8 years. All these provisions serve to increase the convenience of businesses and professionals travelling to Singapore.


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