Free Trade Agreement with Mercosur likely by Aug-end

A formal preferential trading arrangement/free trade agreement (FTA) with Mercosur, a regional grouping consisting of Argentina, Brazil, Uru...

A formal preferential trading arrangement/free trade agreement (FTA) with Mercosur, a regional grouping consisting of Argentina, Brazil, Uruguay and Paraguay, is expected to be signed by August-end. Prior to that, the list of goods on which preferential treatment is to be accorded by the two countries will be finalised this month. When fully operational, the FTA is expected to result in a quantum leap in two-way trade—from $ 1.3 billion to over $ 3 billion in the next five years. It will remain in force for three years and can be terminated by either side on one month’s notice.

A framework trade agreement with Mercusor was recently signed during the visit of Minister of State for Commerce and Industry Satyabrata Mookherjee to Paraguay (Asuuncion).

Mookherjee told reporters on Monday that after signing of the PTA, both sides would get mutual tariff concessions in case of imports from either side. Notwithstanding the distance, prospects for boosting two-way trade were bright, he said, adding that there would be profit margin for both sides. ‘‘We view the Mercusor commercial grouping as a prospective close trade partner of India, and expect to rise in bilateral trade to the extent of more than $ 3 billion within the next five years from the present level of $1.3 billion’’, he said.

The balance of trade has been in Mercusor’s favour during the past three years. While India’s exports were estimated at $ 626.49 million in 01-02, its imports were higher at $ 765.74 million. In the preceding year, exports were placed at $ 465.52 million and imports at $ 603.1 million.