At the 18 March meeting of the World Trade Organization’s (WTO) Committee on Regional Trade Agreements (RTAs), members reviewed several significant agreements: the India-Australia Economic Cooperation and Trade Agreement (ECTA), the Free Trade Agreement (FTA) between China and Nicaragua, and the FTA between China and Cambodia. The Committee also elected Ambassador José Valencia of Ecuador as its new Chairperson at the conclusion of the meeting.
India-Australia Economic Cooperation and Trade Agreement (ECTA)
The India-Australia Economic Cooperation and Trade Agreement, which covers trade in goods and services, came into effect on 29 December 2022. Under the agreement, Australia will eliminate customs duties on 98.3% of its tariff lines by 2026, while India will do the same for 69.8% of its tariff lines by 2031. Both countries have made sectoral commitments on trade in services that go beyond those in the WTO’s General Agreement on Trade in Services (GATS), including provisions for the movement of natural persons.
Australia hailed the agreement as a significant milestone in the bilateral economic relationship, emphasizing its role in supporting both nations’ deeper integration into the global economy. It also noted provisions that bolster investment certainty, regulatory cooperation, and the mobility of skilled professionals.
India expressed that the agreement has led to mutual growth, highlighting the complementary nature of the two economies. The agreement has not only advanced trade ties but has also opened new business and employment opportunities. India reiterated its commitment to building on this momentum to further deepen economic integration.
China-Nicaragua Free Trade Agreement
The Free Trade Agreement between China and Nicaragua, covering trade in goods and services, entered into force on 1 January 2024. By 2038, the agreement will make 95.2% of China’s tariff lines and 94.8% of Nicaragua’s tariff lines duty-free, with both countries maintaining tariffs on approximately 5% of tariff lines. The agreement takes a negative list approach to trade-in services, introducing new and enhanced commitments compared to the GATS, particularly in business and health services. It also includes provisions on the environment, competition, dispute settlement, small and medium enterprises, and e-commerce.
China described the agreement as a significant step in fostering openness between the two economies in goods, services, and investment. It also emphasized the complementary nature of their economies and the substantial potential for trade and investment cooperation.
Nicaragua noted that the agreement builds on the July 2022 Early Harvest Agreement, creating mutual benefits and providing an opportunity to transform the country’s production, trade, and investment structures.
China-Cambodia Free Trade Agreement
The Free Trade Agreement between China and Cambodia, which covers goods and services, came into effect on 1 January 2022. China has committed to eliminating customs duties on 97.3% of its tariff lines by 2041, while Cambodia has pledged to eliminate 90% of its tariffs by the same date. Both parties have front-loaded much of the tariff elimination, with most tariff reductions already in place since 2022. In terms of services, Cambodia’s commitments largely mirror its GATS obligations, with some enhancements in a few sectors. China’s GATS commitments are also enhanced in several sectors under this agreement. Additionally, the agreement includes provisions for cooperation under the Belt and Road Initiative (BRI).
China highlighted that this agreement is its first bilateral FTA with a least-developed country (LDC) and serves as a model for cooperation with LDCs. It also marks the first FTA with a dedicated chapter on BRI cooperation, aimed at enhancing value chains between the two countries.
Cambodia noted that the agreement aligns with WTO commitments, eliminating duties on a substantial share of trade between the two nations. Beyond its economic benefits, Cambodia emphasized that the agreement supports the country’s broader development strategies.
The WTO Committee’s review of these agreements underscores the growing importance of regional trade partnerships in fostering global economic integration. The agreements between India and Australia, China and Nicaragua, and China and Cambodia reflect a diverse range of bilateral and multilateral objectives, including trade liberalization, sectoral commitments in services, and broader developmental cooperation. With the election of Ambassador José Valencia as the new Chairperson, the Committee continues to play a vital role in overseeing the evolution of these trade relationships within the global trading system.
