Bilateral free trade

agreement
INDIA
BILATERAL FREE TRADE AGREEMENT
DEFINITON
A Bilateral free trade agreement ( BTA ) is a
trade agreement between any two countries in
order to reduce tariffs and quotas on items
traded between themselves . A BTA may be either
preferential , wherein benefits and obligations
apply only to the two signatories , or most -
favored , which applies terms that are already
given to other nations under similar
agreements .
" We always use bilateral free trade
agreements to move things beyond WTO
standards . By definition , a bilateral trade
agreement is 'WTO plus' ."
-- Pascal Lamy, then EU Commissioner for Trade
The Jakarta Post, 9 September 2004
FREE TRADE AGREEMENT
A formal arrangement between two or more
countries to reduce or
Eliminate tariffs , quota and barriers to trade in
product and services .
 BFTA
Objectives
qBetter market access
qTrade and investment facilities and promot
qGreater competitiveness for exports
qCapacity building through technical
cooperation and collaboration
Issues
qGoing beyond trade
qMarket fragmentation
qTrade distortions
qTransaction costs
qLoss of sovereignty
BFTA Include :-
Free trade area
Custom union
Common market
Economic union
Long term dynamic effect :-
Increase competition
Increase efficiency
Economic of scale
Advantage preferential agreement
BFTA talks :- Working Groups
Industrial goods Sanitary measures

Textiles and clothing Agriculture

Custom procedures Rules of origin

Technical barriers to trade Trade remedies

Services
Intellectual property rights
Financial services
Government procurement Investment
Environment
Telecommunications
E - commerce
Competition policy
Legal matters
Advantage of BFTA
Long term market access opportunities
Access to cheaper import
Attractive FDI destination
Promote capacity building
Technology exchange/ Transfer
Economic of Scale
Improve the competitiveness and efficiency



Various BFTA of INDIA
Sri Lanka (1998)
Thailand (2003)
ASEAN (BFTA is under process)
Bangladesh (BFTA is under process)
Colombia (BFTA is under process)
Uruguay (BFTA is under process)
Venezuela (BFTA is under process)
Mauritius (BFTA is under process)
Advantage of BFTA to
Business
Expand and penetration of overseas market
Elimination of import duties on negotiation
product
Sources input at competitive price
BFTA would offer trade facilitation

Principle of BFTA
qAbsolute advantage
qComparative advantage
qCompetitive advantage
Absolute
advantage
A country benefits by producing only those
product in which it has
absolute Advantage. or can produce using fewer
resource than
another country.
EXAMPLE

1 TON OF CLOTH WHEAT

FRANCE 30 40
GERMANY 100 20
Comparative
advantage
It can be beneficial for two countries to
trade without barriers as long as one is
more efficient at producing good or
services needed by the other. What matter Is
not the absolute cost of production but
rather the relative efficiencies with which
A countries can produce the product.
1 Ton of Cloth Wheat
FRANCE 30 40
GERMANY 10 20
 BILATERAL TRADE GREEMENT
Agreement   Country   Country   Date  
Armenia-Kazakhstan free trade
Armenia
agreement Kazakhstan 02001-12-25December 25,
2001
Armenia-Kyrgyzstan free trade
Armenia
agreement Kyrgyzstan 01995-10-27October 27,
1995
Armenia-Moldova free trade
Armenia
agreement Moldova 01995-12-21December 21,
1995
Armenia-Turkmenistan freeArmenia
trade agreement Turkmenistan 01996-07-07July 7, 1996

ASEAN-China trade agreement

Association of China
[7] Southeast Asian Nations

Closer Economic Relations

Australia New Zealand

Australia-Chile Free Trade

Australia
Agreement Chile

Australia-Singapore free Australia

trade agreement Singapore

Australia-Thailand free trade

Australia
agreement Thailand

Australia-United States Free

Australia
Trade Agreement United States 2004

Canada-Chile Free Trade Agreement

Canada Chile
Canada - Colombia free trade agreement
Canada Colombia

Canada - Costa Rica Free TradeCanada

Agreement Costa Rica

Canada - Israel Free Trade Agreement

Canada Israel

Canada - Peru free trade agreement

Canada Peru

Chile - El Salvador free tradeChile

agreement El Salvador 02002 - 06 - 03June 3 , 2002

Chile - El Salvador free tradeChile

agreement Costa Rica

Chile - Costa Rica free trade Chile

agreement Costa Rica

Chile - Mexico free trade agreement

Chile Mexico

Chile - Japan free trade agreement

Chile Japan 02007 - 09 - 03September 3 , 2007

Chile - South Korea free tradeChile

agreement South Korea 02004 - 04 - 01April 1 , 2004

China - Chile free trade agreement

Chile China ( People's Republic of 02006 - 10 - 01October 1 , 2006 [8]
China )

China – Peru Free Trade Agreement

China ( People's Republic of Peru
China )
 EXAMPLE
The United States-Canada Bilateral Trade Relationship
Purpose of US - Canada BFTA
Elimination of barrier
Fair competition
Liberalization condition for investment
Procedure for joint administration
Foundation for future expansion

By The Numbers :
United States and Canada
have the world’s
largest bilateral
trade relationship,
with total exports and
imports exceeding
$533.7 billion in 2006.

$303.4 billion in goods
and services were
imports form Canada
and remaining $230.3
billion exports to
Canada

 By The Numbers :
 The US trade deficit with
Canada is $73.1 billion
in 2006

 US merchandise trade
deficit with Canada
decreased 4.4% from its
record $76.5 billion in
2005 to $73.1 billion in
2006.

 Imports generally have
Canadian Trade since 1991
grown faster than
exports in the free
trade era, increasing
from 3.5% of the value
of total trade in 1991
 Economic Integration
 The US and Canada benefit from a highly
integrated economy. Why?

 US and Canada free trade agreements reflect
Comparative Advantage Theory, which
states that all countries can benefit from
free trade even if they are characterized
by low levels of productivity.

 The underlying concept is the opportunity
cost concept – countries have a
comparative advantage in which they are
comparatively most successful.

Trade Agreements
In 1965, the Automotive Agreement was signed
between US and Canada eliminating tariffs
on shipments of autos and auto parts
between the countries.

In 1989, the Free Trade Agreement (FTA) was
signed between the two countries removing
several trade restrictions in stages over a
ten year period


EFFECTS :
Effects Purchasing Power
The shift has major implications in terms of
the energy and auto industries

Trade Disputes
The United States and Canada have highly
integrated and relatively open, transparent
trading regimes. However, a few highly
contentious issues have arisen between the
trading partners.

THANK YOU