MERCOSUR Preferential
Trade Agreement (PTA)
Negotiations
- MERCOSUR is a trading bloc in South America region comprising of
Argentina, Brazil, Paraguay and Uruguay. It was formed in 1991 with the
objective of free movement of goods, services, capital and people and became a
customs union in January 1995. MERCOSUR’s role model is European Union. It is
the third largest integrated market after the European Union (EU), North
American Free Trade Agreement (NAFTA).
- A Framework Agreement had been signed between India and MERCOSUR on 17th June
2003 at Asuncion, Paraguay. The aim of this Framework Agreement was to create
conditions and mechanisms for negotiations in the first stage, by granting
reciprocal tariff preferences and in the second stage, to negotiate a free trade
area between the two parties .
- As a follow up to the said Framework Agreement, a Preferential Trade
Agreement (PTA) between India and MERCOSUR was signed in New Delhi on January
25, 2004 and five annexes to this Agreement were signed and incorporated on
March 19, 2005. The first two Annexes of the PTA are relating to the list of
products on which the two sides have agreed to give fixed tariff preferences to
each other. The subsequent three Annexes are related to the Rules of Origin,
Preferential Safeguard Measures and Dispute Settlement Procedures respectively.
By this PTA, India and MERCOSUR have agreed to give tariff concessions, ranging
from 10% to 100% to the other side on 450 and 452 tariff lines respectively.
- The major sectors covered in offer list of India are meat and meat products,
inorganic chemicals, organic chemicals, dyes & pigments, raw hides and skins,
leather articles, wool, cotton yarn, glass and glassware, articles of iron and
steel, machinery items, electrical machinery and equipments, optical,
photographic & cinematographic apparatus. The break-up of the number of tariff
lines for different margin of preferences (MOP ) is :- 93 tariff lines – 10%,
336 tariff lines – 20% and 21 tariff lines – 100%.
- The major product groups covered in the offer list of MERCOSUR are food
preparations, organic chemicals, pharmaceuticals, essential oils, plastics &
articles thereof, rubber and rubber products, tools and implements, machinery
items, electrical machinery and equipments. The break-up of the number of tariff
lines for different MOPs is: - 393 tariff lines – 10%, 45 tariff lines – 20% and
14 tariff lines – 100%.
- India- MERCOSUR PTA came into effect from 1st June, 2009. Implementation of
India-MERCOSUR PTA was by WTO Sectt on 24.02.10.
- Expansion of India-MERCOSUR PTA - Through IBSA Declaration made by the Heads
of India, Brazil and South Africa in 2006, it was agreed that India-MERCOSUR PTA
would be expanded by increasing the number of products covered and increasing
the tariff concessions agreed by each side.
- The first meeting of Joint Administrative Committee (JAC) on India-MERCOSUR
PTA was held in November, 2009 in Uruguay to discuss the various aspects of the
implementation and expansion of the Agreement. The 2nd meeting of JAC on
India-MERCOSUR PTA was held in June, 2010, in which both sides exchanged their
respective wish list of additional items for expansion of the PTA and discussed
the further modalities of expansion of the PTA including exchange of their
initial offers lists in the matter.