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International Trade
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India-Sri Lanka FTA
FREE TRADE AGREEMENT BETWEEN
THE REPUBLIC OF INDIA
AND THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA
PREAMBLE
The Government of the Republic of India and the
Government of the Democratic Socialist Republic of
Sri Lanka, (hereinafter referred to as the
"Contracting Parties").
CONSIDERING that the expansion of their
domestic markets, through economic integration, is a
vital prerequisite for accelerating their processes
of economic development.
BEARING in mind the desire to promote
mutually beneficial bilateral trade.
CONVINCED of the need to establish and
promote free trade arrangements for strengthening
intra-regional economic cooperation and the
development of national economies.
FURTHER RECOGNIZING that progressive
reductions and elimination of obstacles to bilateral
trade through a bilateral free trade agreement
(hereinafter referred to as "The
Agreement") would contribute to the expansion
of world trade.
HAVE agreed as follows:
Article I
Objectives
-
The Contracting Parties
shall establish a Free Trade Area in accordance
with the provisions of this Agreement and in
conformity with relevant provisions of the
General Agreement on Tariff and Trade, 1994.
-
The objectives of this
Agreement are:
-
To promote
through the expansion of trade the harmonious
development of the economic relations between
India and Sri Lanka.
-
To provide fair
conditions of competition for trade between
India and Sri Lanka
-
In the
implementation of this Agreement the Contracting
Parties shall pay due regard to the principle of
reciprocity
-
To contribute in
this way, by the removal of barriers to trade,
to the harmonious development and expansion of
world trade
Article II
Definitions
For the purpose of this agreement:
-
"Tariffs" means
basic customs duties included in the national
schedules of the Contracting Parties.
-
"Products" means
all products including manufactures and commodities
in their raw, semi-processed and processed forms.
-
"Preferential
Treatment" means any concession or privilege
granted under this Agreement by a Contracting Party
through the elimination of tariffs on the movement
of goods.
-
"The Committee"
means the Joint Committee referred to in Article XI.
-
"Serious Injury"
means significant damage to domestic producers, of
like or similar products resulting from a
substantial increase of preferential imports in
situations which cause substantial losses in terms
of earnings, production or employment unsustainable
in the short term. The examination of the impact on
the domestic industry concerned shall also include
an evaluation of other relevant economic factors and
indices having a bearing on the state of the
domestic industry of that product.
-
"Threat of serious
injury" means a situation in which a
substantial increase of preferential imports is of a
nature so as to cause "Serious injury" to
domestic producers, and that such injury, although
not yet existing is clearly imminent. A
determination of threat of serious injury shall be
based on facts and not on more allegation,
conjecture, or remote or hypothetical possibility.
-
"Critical
circumstances" means the emergence of an
exceptional situation where massive preferential
imports are causing or threatening to cause
"serious injury" difficult to repair and
which calls for immediate action.
Article III
Elimination of Tariffs
The Contracting Parties hereby agree to establish a
Free Trade Area for the purpose of free movement of
goods between their countries through elimination of
tariffs on the movement of goods in accordance with the
provisions of Annexures A & B which shall form an
integral part of this Agreement.
Article IV
General Exceptions
Nothing in this Agreement shall prevent any
Contracting Party from taking action and adopting
measures, which it considers necessary for the
protection of its national security, the protection of
public morals, the protection of human, animal or plant
life and health, and the protection of articles of
artistic, historic and archaeological value, as is
provided for in Articles XX and XXI of the General
Agreement on Tariff and Trade, 1994.
Article V
National Treatment
The Contracting Parties affirm their commitment to
the principles enshrined in Article III of GATT 1994.
Article VI
State Trading Enterprises
-
Nothing in this Agreement
shall be construed to prevent a Contracting Party
from maintaining or establishing a state trading
enterprise as understood in Article XVII of General
Agreement on Tariff and Trade, 1994.
-
Each Contracting Party
shall ensure that any state enterprise that it
maintains or establishes acts in a manner that is
not inconsistent with the obligations of the
Contracting Parties, under this Agreement and
accords non-discriminatory treatment in the import
from and export to the other Contracting Party.
Article VII
Rules of Origin
-
Products covered by the
provisions of this Agreement shall be eligible for
preferential treatment provided they satisfy the
Rules of Origin as set out in Annexure C to this
Agreement which shall form an integral part of this
Agreement.
-
For the development of
specific sectors of the industry of either
Contracting Party, lower value addition norms for
the products manufactured or produced by those
sectors may be considered through mutual
negotiations.
Article VIII
Safeguard Measures
-
If any product, which is
the subject of preferential treatment under this
Agreement, is imported into the territory of a
Contracting Party in such a manner or in such
quantities as to cause or threaten to cause, serious
injury in the importing Contracting Party, the
importing Contracting Party may, with prior
consultations except in critical circumstances,
suspend provisionally without discrimination the
preferential treatment accorded under the Agreement.
-
When action has been taken
by either Contracting Party in terms of paragraph I
of this Article, it shall simultaneously notify the
other Contracting Party and the Joint Committee
established in terms of Article XI. The Committee
shall enter into consultations with the concerned
Contracting Party and endeavor to reach mutually
acceptable agreement to remedy the situation. Should
the consultations in the Committee fail to resolve
the issue within sixty days, the party affected by
such action shall have the right to withdraw the
preferential treatment.
Article IX
Domestic Legislation
The Contracting Parties shall be free to apply their
domestic legislation to restrict imports, in cases where
prices are influenced by unfair trade practices like
subsidies or dumping. Subsidies and dumping shall be
understood to have the same meaning as in the General
Agreement on Tariff and Trade, 1994 and the relevant WTO
Agreements.
Article X
Balance of Payment Measures
-
Notwithstanding the
provisions of this Agreement, any Contracting Party
facing balance of payments difficulties may suspend
provisionally the preferential treatment as to the
quantity and value of merchandise permitted to be
imported under the Agreement. When such action has
taken place, the Contracting Party, which initiates
such action shall simultaneously notify the other
Contracting Party.
-
Any Contracting Party,
which takes action according to paragraph 1 of this
Article, shall afford, upon request from the other
Contracting Party, adequate opportunities for
consultations with a view to preserving the
stability of the preferential treatment provided
under this Agreement.
Article XI
Joint Committee
-
A Joint Committee shall be
established at Ministerial level. The Committee
shall meet at least once a year to review the
progress made in the implementation of this
Agreement and to ensure that benefits of trade
expansion emanating from this Agreement accrue to
both Contracting Parties equitably. The Committee
may set up Sub-Committees and/or Working Groups as
considered necessary.
-
In order to facilitate
cooperation in customs matters, the Contracting
Parties agree to establish a Working Group on
customs related issues including harmonization of
tariff headings. The Working Group shall meet as
often as required and shall report to the Committee
on its deliberations.
-
The Committee shall accord
adequate opportunities for consultation on
representations made by any Contracting Party with
respect to any matter affecting the implementation
of the Agreement. The Committee shall adopt
appropriate measures for settling any matter arising
from such representations within 6 months of the
representation being made. Each Contracting Party
shall implement such measures immediately.
-
The Committee shall
nominate one apex chamber of trade and industry in
each country as the nodal chamber to represent the
views of the trade and industry on matters relating
to this Agreement.
Article XII
Consultations
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Each Contracting Party
shall accord sympathetic consideration to and shall
afford adequate opportunity for, consultations
regarding such representations as may be made by the
other Contracting Party with respect to any matter
affecting the operation of this Agreement.
-
The Committee may meet at
the request of a Contracting Party to consider any
matter for which it has not been possible to find a
satisfactory solution through consultations under
paragraph 1 above.
Article XIII
Settlement of Disputes
-
Any dispute that may arise
between commercial entities of the Contracting
Parties shall be referred for amicable settlement to
the nodal apex chambers. Such references shall, as
far as possible, be settled through mutual
consultations by the Chambers. In the event of an
amicable solution not being found, the matter shall
be referred to an Arbitral Tribunal for a binding
decision. The Tribunal shall be constituted the
Joint Committee in consultation with the relevant
Arbitration Bodies in the two countries.
-
Any dispute between the
Contracting Parties regarding the interpretation and
application of the provisions of this Agreement or
any instrument adopted within its framework shall be
amicably settled through negotiations failing which
a notification may be made to the Committee by any
one of the Contracting Parties.
Article XIV
Duration and Termination of Agreement
This Agreement shall remain in force until either
Contracting Party terminates this Agreement by giving
six months written notice to the other of its intention
to terminate the Agreement.
Article XV
Amendments
The Agreement may be modified or amended through
mutual agreement of the Contracting Parties. Proposals
for such modifications or amendments shall be submitted
to the Joint Committee and upon acceptance by the Joint
Committee, shall be approved in accordance with the
applicable legal procedures of each Contracting Party.
Such modifications or amendments shall become effective
when confirmed through an exchange of diplomatic notes
and shall constitute an integral part of the Agreement.
Provided however that in emergency situations, proposals
for modifications may be considered by the Contracting
Parties and if agreed, given effect to through an
exchange of diplomatic notes.
Article XVI
Annexures to be finalized
Annexure D(i) and D(ii) (Negative Lists of India and
Sri Lanka respectively), E (Items on which India has
undertaken to give 100% tariff concession on coming into
force of the Agreement) and F (Items on which Sri Lanka
has undertaken to give 100% tariff concession on the
coming into force of the Agreement) shall be finalised
within a period of 60 days of the signing of this
Agreement. All the Annexures shall form an integral part
of the Agreement.
Article XVII
Entry into Force
The Agreement shall enter into force on the thirtieth
day after the Contracting Parties hereto have notified
each other that their respective constitutional
requirements and procedures have been completed.
In witness where of the undersigned, duly authorised
thereto by their respective Governments, have signed
this Agreement.
Done in duplicate at New Delhi this 28th day of December
1998 in two originals in the English language.
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Sd/-
For the Government of the
Republic of India
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Sd/-
For the Government of the Democratic Socialist
Republic of Sri Lanka
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Annexure A
Concession offered by India
The Government of India shall grant duty free access
to all exports from Sri Lanka in respect of items freely
importable into India, except on items listed in Annex D
of this Agreement, in accordance with the phase out
schedule detailed below:
- Upon entry into force of the Agreement :-
-
Zero duty access for
the items in Annexure E
-
50% margin of
preference on the remaining items except on items
listed in Annexure D. Concessions on items in
Chapters 51 to 56, 58 to 60 and 63 shall be
restricted to 25%.
- The margin of preference on the items mentioned in
(b) above shall be increased to 100% in two stages
within three years of the coming into force of the
Agreement, except for the textiles items referred to
in 1(b) above.
Annexure B
Concession offered by Sri Lanka
Government of Sri Lanka shall provide tariff
concessions on exports from India to Sri Lanka in
respect of items freely importable into Sri Lanka, as
detailed below:-
-
Zero duty for the items in
Annex F I, upon entering into force of the
Agreement.
-
50% margin of preference
for the items in Annex F II, upon coming
into force of the Agreement. The margin of
preference in respect of these items shall be
deepened to 70%, 90% and 100%, respectively, at the
end of the first, second and third year of the entry
into force of the Agreement.
-
For the remaining items
except those in Annex D, the tariffs shall be
brought down by not less than 35% before the expiry
of three years and 70% before the expiry of the
sixth year and 100% before the expiry of eight
years, from the date of entry into force of the
Agreement.
CONCESSION
OFFERED BY SRI LANKA
Annexure C
RULES OF ORIGIN
- Short title/commencement
These rules may be called
the rules of Determination of Origin of Goods under the
Free Trade Agreement between the Democratic Socialistic
Republic of Sri Lanka and the Republic of India.
- Application
These rules shall apply
to products consigned from the territory of either of
the Contracting Parties.
- Determination of Origin
No product shall be
deemed to be the produce or manufacture of either
country unless the conditions specified in these rules
are complied with in relation to such products, to the
satisfaction of the appropriate Authority.
- Claim at the time of importation
The importer of the
product shall, at the time of importation:
-
make a claim that the
products are the produce or manufacture of the
country from which they are imported and such
products are eligible for preferential treatment
under the Agreement, and
-
produce the evidence
specified in these rules.
- Originating products
Products covered by the
Agreement imported into the territory of a Contracting
Party from another Contracting Party which are consigned
directly within the meaning of rule 9 hereof, shall be
eligible for preferential treatment if they conform to
the origin requirement under any one of the following
conditions:
-
Products wholly produced
or obtained in the territory of the exporting
Contracting Party as defined in rule 6; or
-
Products not wholly
produced or obtained in the territory of the
exporting Contracting Party, provided that the
said products are eligible under rule 7 or rule 8.
- Wholly produced or obtained
Within the meaning of
rule 5(a), the following shall be considered as wholly
produced or obtained in the territory of the exporting
Contracting Party:
-
raw or mineral
products extracted from its soil, its water or its
seabed;
-
vegetable products
harvested there;
-
animals born and
raised there;
-
products obtained
from animals referred to in clause (c) above;
-
products obtained by
hunting or fishing conducted there;
-
products of sea
fishing and other marine products from the high seas
by its vessels3,4;
-
products processed
and/or made on board its factory ships exclusively
from products referred to in clause (f) above4,5;
-
used articles
collected there, fit only for the recovery of raw
materials;
-
waste and scrap
resulting from manufacturing operations conducted
there;
-
products extracted
from the seabed or below seabed which is situated
outside its territorial waters, provided that it has
exclusive exploitation rights;
-
goods produced there
exclusively from the products referred to in clauses
(a) to (j) above.
- Not wholly produced or obtained
-
Within the meaning of
rule 5(b), products worked on or processed as a
result of which the total value of the materials,
parts or produce originating from countries other
than the Contracting Parties or of undetermined
origin used does not exceed 65% of the f.o.b. value
of the products produced or obtained and the final
process of manufacture is performed within the
territory of the exporting Contracting Party shall
be eligible for preferential treatment, subject to
the provisions of clauses (b), (c), (d) and (e) of
rule 7 and rule 8.
-
Non-originating
materials shall be considered to be sufficiently
worked or processed when the product obtained is
classified in a heading, at the four digit level, of
the Harmonised Commodity Description and Coding
System different from those in which all the
non-originating materials used in its manufacture
are classified.
-
In order to determine
whether a product originates in the territory of a
Contracting Party, it shall not be necessary to
establish whether the power and fuel, plant and
equipment, and machines and tools used to obtain
such products originate in third countries or not.
-
The following shall
in any event be considered as insufficient working
or processing to confer the status of originating
products, whether or not there is a change of
heading:
-
Operations to
ensure the preservation of products in good
condition during transport and storage
(ventilation, spreading out, drying, chilling,
placing in salt, sulphur dioxide or other aqueous
solutions, removal of damaged parts, and like
operations).
-
Simple operations
consisting of removal of dust, sifting or
screening, sorting, classifying, matching
(including the making-up of sets of articles),
washing, painting, cutting up;
-
changes of packing
and breaking up and assembly of consignments,
simple slicing,
cutting and repacking or placing in bottles, flasks,
bags, boxes, fixing on cards or boards, etc., and
all other simple packing operations.
-
the affixing of
marks, labels or other like distinguishing signs
on products or their packaging;
-
simple mixing of
products, whether or not of different kinds, where
one or more components of the mixture do not meet
the conditions laid down in these Rules to enable
them to be considered as originating products;
-
simple assembly of
parts of products to constitute a complete
product;
-
a combination of
two or more operations specified in (a) to (f);
-
slaughter of
animals.
- The value of the non-originating materials,
parts or produce shall be:
-
The c.i.f. value at the
time of importation of the materials, parts or
produce where this can be proven; or
-
The earliest
ascertainable price paid for the materials,
parts or produce of undetermined origin in the
territory of the Contracting Parties where the
working or processing takes place.
- Cumulative rules of origin
In respect of a product,
which complies with the origin requirements provided in
rule 5(b) and is exported by any Contracting Party and
which has used material, parts or products originating
in the territory of the other Contracting Party, the
value addition in the territory of the exporting
Contracting Party shall be not less than 25 per cent of
the f.o.b. value of the product under export subject to
the condition that the aggregate value addition in the
territories of the Contracting Parties is not less than
35 per cent of the f.o.b. value of the product under
export.
- Direct consignment
The following shall be
considered to be directly consigned from the exporting
country to the importing country:
-
if the products are
transported without passing through the territory
of any country other than the countries of the
Contracting Parties.
-
The products whose
transport involves transit through one or more
intermediate countries with or without
transhipment or temporary storage in such
countries; provided that
-
the transit entry is
justified for geographical reason or by
considerations related exclusively to transport
requirements;
-
the products have not
entered into trade or consumption there; and
-
the products have not
undergone any operation there other than
unloading and reloading or any operation
required to keep them in good condition.
- Treatment of packing
When determining the
origin of products, packing should be considered as
forming a whole with the product it contains. However,
packing may be treated separately if the national
legislation so requires.
- Certificate of origin
Products eligible for a
Certificate of origin in the form annexed shall support
preferential treatment issued by an authority designated
by the Government of the exporting country and notified
to the other country in accordance with the
certification procedures to be devised and approved by
both the Contracting Parties.
- Prohibitions
Either country may
prohibit importation of products containing any inputs
originating from States with which it does not have
economic and commercial relations;
- Co-operation between contracting parties
-
The Contracting Parties
will do their best to co-operate in order to
specify origin of inputs in the Certificate of
origin.
-
The Contracting Parties
will take measures necessary to address, to
investigate and, where appropriate, to take legal
and/or administrative action to prevent
circumvention of this Agreement through false
declaration concerning country of origin or
falsification of original documents.
-
Both the Contracting
Parties will co-operate fully, consistent with
their domestic laws and procedures, in instances
of circumvention or alleged circumvention of the
Agreement to address problems arising from
circumvention including facilitation of joint
plant visits and contacts by representatives of
both Contracting Parties upon request and on a
case by case basis.
-
If either Party believes
that the rules of origin are being circumvented,
it may request consultation to address the matter
or matters concerned with a view to seeking a
mutually satisfactory solution. Each party will
hold such consultations promptly.
- Review
These rules may be
reviewed as and when necessary upon request of either
Contracting Party and may be open to such modifications
as may be agreed upon.
Notes:
-
Includes mineral fuels,
lubricants and related materials as well as mineral
or metal ores
-
Includes agricultural and
forestry products
-
"Vessels" shall
refer to fishing vessels engaged in commercial
fishing, registered in the country of the
Contracting Party and operated by a citizen or
citizens of the Contracting Party or partnership,
corporation or association, duly registered in such
country, at least 60 per cent of equity of which is
owned by a citizen or citizens and/or Government of
such Contracting Party or 75 per cent by citizens
and/or Governments of the Contracting Parties.
However, the products taken from vessels, engaged in
commercial fishing under Bilateral Agreements which
provide for chartering/leasing of such vessels
and/or sharing of catch between Contracting Party
will also be eligible or preferential treatment.
-
In respect of vessels or
factory ships operated by Government agencies, the
requirements of flying the flag of the Contracting
Party does not apply.
-
For the purpose of this
Agreement, the term "factory ship" means
any vessel, as defined, used for processing and/or
making on board products exclusively from those
products referred to in clause (f) of Rule 6.
-
Cumulation as implied by
Rule 8 means that only products which have acquired
originating status in the territory of one
Contracting Party may be taken into account when
used as inputs for a finished product eligible for
preferential treatment in the territory of the other
Contracting Party.
CERTIFICATE OF ORIGIN
| 1.
Goods consigned from (Exporters Business
Name, Address, Country) |
Reference
No.
INDO-SRI LANKA FREE TRADE AGREEMENT (ISFTA)
(Combined declaration and certificate)
Issued
in
.
(Country)
(See notes overleaf)
|
2.
Goods consigned to
(Consignees Name, Address, Country) |
4.
For Official use |
3.
Means of transport and route
(as far as known) |
| 5. Tariff item
number |
6. Marks and
numbers of packages |
7. Number and
kind of packages: description of goods |
8. Origin
criterion (see Notes overleaf) |
9. Gross weight
or other quantity |
10. Number and
date of invoice |
| 11.
Declaration by the Exporter
The undersigned hereby declares that the
above details and statements are correct; That
all the goods were produced in
.
(Country)
and that they comply with the origin
requirements specified for those goods in ISFTA
for goods exported to
.
(Importing Country)
.
Place and date, signature of the authorised
signatory
|
12.
Certificate:
It is hereby certified, on the basis of
control carried out that the declaration by the
exporter is correct.
.
Place and date, signature and stamp of
certifying authority.
|
- To qualify for preference, products must:
-
fall within a description
of products eligible for concessions in the
country of destination under this agreement.
-
comply with ISFTA Rules
of Origin. Each Article in a consignment must
qualify separately in its own right; and
-
comply with the
consignment conditions specified by the ISFTA
Rules of Origin. In general products must be
consigned directly within the meaning of Rule 9
hereof from the country of exportation to the
country of destination.
- Entries to be made in Box 8
Preference products must
be wholly produced or obtained in the exporting
Contracting Party in accordance with Rule 6 of the ISFTA
Rule of Origin, or where not wholly produced or obtained
in the exporting Contracting Party must be eligible
under Rule 7 or Rule 8.
-
Products wholly produced
or obtained enter the letter A in box 8.
-
Products not wholly
produced or obtained; the entry in box 8 should be
as follows:
-
Enter letter B in
box 8 for products, which meet the origin
criterion according to Rule 7. Entry of letter
would be followed by the sum of the value of
materials, parts or produce originating from
non-contracting parties or undetermined origin
used, expressed as a percentage of the f.o.b.
value of the products; (example B( ) percent).
-
Enter letter C in
box 8 for products, which meet the origin
criteria according to Rule 8. Entry of letter
C would be followed by the sum of the
aggregate content originating in the territory
of the exporting Contracting Party expressed as
a percentage of the f.o.b. value of the exported
product: (example C ( ) per cent).
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