Synopsis of CEPA between India & UAE in respect of Trade in Goods

Synopsis of Comprehensive Economic Partnership Agreement (CEPA) between Govt. of India and UAE in respect of Trade in Goods

1. Key Points

• India-UAE CEPA is a comprehensive agreement, which will cover Trade in Goods, Rules of Origin, Trade in Services, Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures, Dispute Settlement, Movement of Natural Persons, Telecom, Customs Procedures, Pharmaceutical products, Government Procurement, IPR, Investment, Digital Trade and Cooperation in other Areas.
• The CEPA between India and the UAE covers almost all the tariff lines dealt in by India (11,908 tariff lines) and the UAE (7581 tariff lines) respectively.
• India will benefit from preferential market access provided by the UAE on over 97% of its tariff lines which account for 99% of Indian exports to the UAE in value terms, especially for all labour-intensive sectors such as Gems and Jewellery, Textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering products, medical devices, and Automobiles. India will also be offering preferential access to the UAE on over 90% of its tariff lines, including lines of export interest to the UAE.
• As regards trade in services, India has offered market access to the UAE in around 100 sub-sectors, while Indian service providers will have access to around 111 sub-sectors from the 11 broad service sectors such as ‘business services’, ‘communication services’, ‘construction and related engineering services’, ‘distribution services’, ‘educational services’, ‘environmental services’, ‘financial services’, ‘health related and social services’, ‘tourism and travel related services’, ‘recreational cultural and sporting services’ and ‘transport services’.

2. Current Status

• India-UAE CEPA was signed on 18 February 2022. The agreement is expected to enter into force on 01 May 2022 and shall be valid for an indefinite period unless terminated.

3. India-UAE CEPA Tariff concessions on products:

For HSN wise tariff concessions on products refer annexures to the CEPA:

• Annexure 2A : Schedule of Specific Tariff Commitments of India on Trade in Goods
• Annexure 2B : Schedule of Specific Tariff Commitments of UAE on Trade in Goods

4. Origin Criteria:

1. A product shall be deemed as originating in a Party and shall be eligible for preferential treatment provided it:

2. Wholly Obtained or Produced Product (Refer Article 3.3);

3. has undergone sufficient working or production as per Product Specific Rule (Refer Annexure 3B)

4. The final manufacture before export must have occurred in the Party of export.

5. Method of computing value addition (VA):

Method I: (FOB value or Ex Works price) – (Value of NOM) / FOB value or Ex Works price; OR

Method II: (Cost of originating material + direct labour cost + direct overhead cost) / FOB value or Ex Works price

• The value of the packages, packing materials and containers for retail sale in which a product is packed for retail sale shall be taken into account as originating or non-originating, as the case may be, in calculating the value addition for the product.
• The containers and packing materials exclusively used for the transport or shipment of a product shall not be taken into account for determining the origin of the product.

6. Non-originating materials criteria:

• Non-originating materials that do not meet the required change in tariff classification (CTC), if applicable in the product specific rule (PSR), shall be deemed originating if:

1. their total value does not exceed 10% of the FOB value or Ex Works price of the exported product; OR

2. in the case of textiles and clothing under HS chapters 50-63, the weight of the non-originating material is less than 7% of the total weight of the materials used in the production of the exported product OR 10% of the FOB value or Ex Works price.

• In case of a wholly obtained product, a de minimis value not exceeding 1% of the FOB value or Ex Works price of the exported product is allowed.

7. Other conditions pertaining to originating criteria:

A product shall not be considered originating product,

• by merely undergoing specified operations/process (i.e. Minimal or insufficient operation and processes) as per Article 3.5;
• by reason of non-qualifying operations as per Article 3.6;
• where originating products from the territory of a Party are used in the production of a product in the territory of the other Party (Bilateral Cumulation) as per Article 3.7;
• The packages, packing materials and containers for retail sale in which a product is packed for retail sale shall not be regarded in determining whether all non-originating materials used in the manufacture of a product undergo a CTC applicable to the said product as per Article 3.8;
• Subject to specified conditions as per Article 3.9, accessories, spare parts, and tools classified and delivered with a product that form part of the products standard accessories, spare parts, or tools as per standard trade practice, shall be considered as originating and part of the product in question;
• Indirect materials, shall be considered neither originating nor non-originating when the qualifying value addition as per origin criteria;

8. Certificate of Origin

• For issuance of Certificate of Origin (‘COO’), the final producer, manufacturer or exporter of the product shall present, or submit electronically through the approved channel, to the issuing authority of the exporting Party and fulfil all other certification procedures as specified;
• For the purposes of claiming preferential tariff treatment, the importer or its authorised representative shall submit to the Customs Administration of the importing Party, at the time of filing import declaration, an original copy of the COO including supporting documentation and other documents as required, in accordance with the laws and regulations of the importing Party;
• Where required, specified procedure for verification may be carried out for verification of COO;
• COO shall be valid for only one import and shall include one or more products and shall be issued by specified issuing authorities;
• COO shall be valid for 12 months from the date of issue in the exporting Party and shall be submitted within validity period;
• COO shall be submitted to the Customs Administration of the importing Party in accordance with the procedures applicable in that Party;
• COO shall be issued prior to, at or within 5 working days of the date of exportation except in case of exceptional cases (Refer Article 3.14);

9. Proof of Origin

The proof of origin of an exported product shall be provided through any of the following means:

• a paper Certificate of Origin in electronic or hard copy format issued by a competent authority referred to in Article 3.14 (Certificate of Origin (‘COO’) and Certification Procedures);
• a fully digitised Certificate of Origin (E-Certificate) issued by a competent authority and exchanged by a mutually developed electronic system as per Article 3.34 (Exchange of Electronic Data on Origin);
• an origin declaration made out by an approved exporter referred to in Article 3.35 (Origin Declaration);

10. Third Party Invoicing

• An importing Party shall not deny a claim for preferential tariff treatment for the sole reason that an invoice was not issued by the exporter or producer of a product provided that it meets the requirements;
• The exporter of the products shall indicate “third-party invoicing” and such other information as specified of the company issuing the invoice which shall appear in a separate column in the COO.

11. The importer shall keep records relevant to the importation in accordance with the laws and regulations of the importing Party. The application for COO and all documents related to such application shall be retained by the competent authority for not less than 5 years from the date of issue.

12. The above synopsis covers only the general overview of agreement with respect to trade on goods and excludes below topics which can read from CEPA and relevant annexures:

• sanitary and phytosanitary measures;
• digital trade;
• government procurement;
• dispute settlement;
• trade in services.