India-South Korea Trade Negotiations
Currently, Indian Officials and their South Korean counterparts are vigorously engaged in negotiations to upgrade their existing Comprehensive Economic Partnership Agreement (CEPA). The focal point of their dialogues lies in the expansion of market access for products such as steel, rice, and shrimp, as per our sources. This happened in the backdrop of a sudden 513% import duty on rice and 5% duty on shrimp issued by South Korea against India.
Indian Perspective
A point of concern during the 10th round of dialogues was the operational methods of Korean companies in India. It was revealed that these companies prefer to source steel from Korean firms, causing damage to Indian steel companies. Under South Korea’s rice quota system, India is placed in the ‘others’ category, thus receiving only a 20,000 tonnes quota out of 5 lakh tonnes which South Korea allocates. Countries like China, Australia, the US, Thailand, and Vietnam receive most of the tariff rate quota. Now, India demands recognition in a country-specific quota or at least a significant increment in the current holding.
South Korea’s Expectations
In contrast to India’s concerns, South Korea is looking to gain more access to India’s market in terms of auto components and chemical sectors. This demand arises as a part of the ongoing CEPA upgrade initiative, as both nations mutually hope that this upgrade will strengthen their economic cooperation.
Previous Discussions and Deficit Concerns
Our sources report that the most recent dialogue took place in Seoul in November 2022. The general atmosphere during the discussion was hopeful; the officials believed that the upgraded CEPA would enhance and deepen their bilateral economic relationship. India, however, voiced concerns over the continuously widening trade deficit with South Korea. The recent years have seen a significant decrease in Indian exports to South Korea while there has been a spike in imports. This situation has led to an increasing imbalance in trade transactions between both nations.
