CEPA: Boosting UAE-India Trade and Collaboration

January 25, 2024by Jerome Jose0

A majority of tariff lines will be subject to 0% customs duties. Other tariff lines will undergo phased elimination of customs duties over 5, 7, and 10 years.

Introduces an invoice declaration of origin tailored for approved exporters. Collaborative efforts are underway to address Technical Barriers to Trade (TBT).

Commits to implementing Authorized Economic Operator (AEO) mutual recognition agreements for smoother customs processes. Incorporates provisions for dispute settlement, digital trade, and intellectual property rights.

The UAE-India Comprehensive Economic Partnership Agreement (CEPA) is a landmark agreement signed in February 2022 with the aim of revolutionizing trade and economic cooperation between the two nations. It is as much an economic partnership agreement as it is a testament to the longstanding friendship the two countries have enjoyed since the establishment of diplomatic relationships in 1972. The CEPA between UAE-India trade facilitates trade by providing immediate and progressive duty reductions on imported goods and transparency in customs procedures for preferential treatment of imported goods.

The CEPA enables traders from both countries to avail preferential treatments and customs benefits related to the import of various goods. The Department of Commerce, the Central Board of Indirect Taxes and Customs of India, and the Ministry of Economy in the UAE, respectively, are responsible for the issuance of the certificate of origin for preferential treatment.

Encompassing nearly all tariff lines handled by India (11,908 tariff lines) and the UAE (7,581 tariff lines), the CEPA signifies an extensive trade agreement. Across 11 service sectors and more than 100 sub-sectors, key areas of focus include business services (incorporating professional services such as computer accounting, real estate, advertising, packaging, etc.), telecommunication services, construction and related services, educational services, environmental services, financial and insurance services, health-related and social services, tourism and travel-related services (including hotel and travel agency services), recreational, cultural, and sporting services, as well as transport services (covering maritime and air transport services, airport services, and repair). This comprehensive agreement reflects a strategic effort to enhance economic collaboration and diversify trade opportunities between India and the UAE.

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Key Benefits of CEPA for UAE-India Trade

The Comprehensive Economic Partnership Agreement (CEPA) is anticipated to enhance the facilitation of cross-border trade and investment flows between the UAE and India, offering several key advantages to both nations:

1. Reduced Tariffs for Trade in Goods – Preferential Tariff Rates

      • Tariff Elimination Immediate (TEI): A majority of tariff lines will be subject to 0% customs duties.
      • Tariff Elimination Phased (TEP): Other tariff lines will undergo phased elimination of customs duties over 5, 7, and 10 years.
      • Tariff Reduction (TR): Tariffs will be lowered compared to existing rates.

2. Enhanced Trade-in Services

CEPA aims to facilitate the mutual provision of services, creating an open environment and providing market access for cross-border trade in services. Particular focus on broad service sectors such as financial services, telecommunication services, construction and related services, educational and health services, etc.

3. Streamlined Customs Procedures and Trade Facilitation

CEPA places a strong emphasis on streamlining regulatory and administrative customs procedures by adopting international best practices for customs management. Notable measures include the introduction of an invoice declaration of origin tailored for approved exporters, offering an alternative to traditional certificates of origin. Furthermore, collaborative efforts are underway to address Technical Barriers to Trade (TBT), fostering cooperation on agreements in this domain. CEPA also outlines commitments to pursue the implementation of Authorized Economic Operator (AEO) mutual recognition agreements, aimed at facilitating smoother customs processes. In addition, the agreement highlights provisions focused on transparency and impartiality in government procurement, fostering fair practices. Furthermore, mutually agreed-upon provisions are incorporated, covering aspects such as dispute settlement, digital trade, and intellectual property rights, underscoring the comprehensive and multifaceted nature of the economic partnership.

Key benefits for Indian stakeholders

UAE’s Tariff concessions benefit Indian stakeholders with preferential market access on over 97% of its tariff lines, primarily from labor-intensive sectors.

  • Indian service providers will have enhanced access to 111 sub-sectors from 11 broad service sectors.
  • CEPA aims to make UAE a hub for sourcing India’s capital goodsand intermediates for exports to Africa and Europe.
  • The pharmaceutical sector will have access to Indian pharmaceutical products in 90 days for products approved by regulatory authorities.
  • CEPA introduces measures for cross-border trade and efficient customs clearance, including issuing customs rulings before import and reducing unnecessary customs procedures.
  • The agreement provides a platform for SMEs in India to expand internationallyand protects the Indian domestic market against a sudden surge of imports from the UAE.

Key benefits for UAE stakeholders

  • UAE exporters gain greater access to India and within the WTO framework through tariff reduction or elimination.
  • Export subsidies for Indian products exported to the UAE are prohibited, enhancing trade integration.
  • The UAE-India Technical Council on Investment is established to monitor investment activities and identify new opportunities.
  • The agreement protects UAE’s domestic market from potential threats due to tariff elimination and reductions.
  • A committee is established to discuss trade-in goods issues between UAE and India.
  • UAE products are protected from India’s antidumping investigations in cases of transshipment.
  • The agreement promotes communication channels between UAE and India in government procurement.
  • Intellectual property provisions are balanced with UAE laws and international commitments.

Provides a platform for Small and Medium Enterprises (SMEs) to expand internationally.

Aims to establish a dispute settlement mechanism within 120 days.

CEPA: Strategic Governance

The UAE Cabinet has greenlit the mandate and members of the UAE Trade Negotiation Higher Committee, emphasizing its dedication to advancing global trade relations. Concurrently, the Cabinet has officially ratified all final Comprehensive Economic Partnership Agreements (CEPAs), highlighting their strategic importance in bolstering the UAE’s international economic ties. The UAE Trade Negotiation Higher Committee takes center stage in meticulously reviewing CEPA terms, managing strategic matters, and addressing sensitive issues to ensure alignment with national economic objectives.

Meanwhile, the UAE Trade Negotiation National Committee assumes a multifaceted role, reviewing and approving final CEPAs, managing partner-country relations, and developing tailored CEPA strategies for each partner. This committee also oversees the CEPA process and strategic communications, serving as a linchpin in diplomatic and economic initiatives.

Behind these committees stands the UAE trade negotiation team, a cohort of seasoned professionals spanning economics, trade analysis, law, and public relations. Hailing from diverse government and private sector entities, their collective proficiency ensures a comprehensive approach to negotiating and implementing CEPAs in line with the UAE’s broader economic vision. As the nation navigates international trade dynamics, these committees and adept teams are crucial in steering the UAE towards a future marked by robust global economic cooperation and engagement.

Navigating the Future with CEPA and a Vision for Global Economic Success

The CEPA is projected to substantially boost the overall value of bilateral trade in goods, surpassing US$100 billion, and trade in services, exceeding US$15 billion, within five years. Economic cooperation between the UAE and India has flourished since the signing of the Comprehensive Economic Partnership Agreement between the countries in 2022.

The UAE boasts a robust presence of over 83,000 Indian companies across diverse sectors, underscoring the depth of economic collaboration between the two nations. Concurrently, there’s a discernible uptrend in the number of Emirati companies actively participating in strategic sectors within India. Looking ahead, the shared objective is to amplify the presence of companies in both markets, with a special focus on emerging economic sectors. This concerted effort is poised to create thousands of sustainable jobs, contributing significantly to comprehensive development endeavours.

Noteworthy geopolitical developments, such as the UAE’s inclusion in the “BRICS” alliance alongside India, and its strategic role in the economic corridor linking India, the Middle East, and Europe, signal a new era of bilateral cooperation with promising economic prospects.

These synergies are anticipated to positively impact the GDP growth of both nations. Underpinning this collaborative momentum is the Comprehensive Economic Partnership Agreement (CEPA), offering a range of advantages and incentives for businesses. This ongoing partnership is particularly emphasized in sectors like health technology, agriculture, education, climate, and other emerging economic domains, fostering continuous growth, prosperity, and novel avenues for partnership.

About ATB Legal

ATB Legal is a full-service legal consultancy in the UAE providing services in dispute resolution (DIFC Courts, ADGM Courts, mainland litigation management and Arbitrations), corporate and commercial matters, IP, business set up and UAE taxation. We also have a personal law department providing advice on marriage, divorce and wills & estate planning for expats. Please feel free to reach out to us at office@atblegal.com for a non-obligatory initial consultation.

by Jerome Jose

Jerome is a legal consultant at ATB Legal, handling corporate and commercial matters. He is a law graduate from Christ University, Bangalore, and has practised with legal consultancies in the UAE and India.

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