India–Republic of Korea CEPA: Assessment and Future Path

Abstract

India and the Republic of Korea (ROK) are on the path to forging deeper economic cooperation. Both countries signed a Comprehensive Economic Partnership in 2009, which was in effect in 2010, and agreed to reduce and/or eliminate tariffs on goods. In this paper, we examine the sectors—both merchandise goods and services—where India and the ROK have a comparative advantage. We analyze the tariffs and non-tariff measures in the context of India–ROK trade and the gains from trade that can result from a reduction in tariff barriers. Our results suggest that India has a comparative advantage in services and the ROK in merchandise goods. Therefore, future negotiations must focus on India offering market access to the ROK’s merchandise goods and the ROK providing access to India’s services.

Keywords

• India
• Korea
• CEPA
• market comparative advantage
• Grubel–Lloyd index
• non-tariff measures