Context:
The Union Finance Ministry recently clarified certain provisions of Customs (Administration of Rules of Origin under Trade Agreements) CAROTAR Rules.
About
- The Ministry has advised customs field officers to be sensitive in applying CAROTAR and maintain consistency with the provisions of relevant trade agreements or its Rules of Origin.
- It also clarifies that the exemptions specified in a Free Trade Agreement (FTA) with regard to the country of origin would prevail in case of a conflict between the revenue department and an importer.
- India has inked FTAs with several countries, including UAE, Mauritius, Japan, South Korea, Singapore, and ASEAN members.
- Under FTA, the trading partners agree to significantly reduce or eliminate import/customs duties on the maximum number of goods traded between them, besides relaxing norms to promote trade in services and investments.
About Free Trade Agreement
- It is an arrangement between two or more countries or trading blocs that primarily agree to reduce or eliminate customs tariff and non-tariff barriers on substantial trade between them.
- It covers trade in goods (such as agricultural or industrial products) or trade in services (such as banking, construction, trading etc.).
- It also covers other areas such as intellectual property rights (IPRs), investment, government procurement and competition policy etc.
- India has inked FTAs with several countries, including Japan, South Korea, Sri Lanka and ASEAN members.
- Benefits:
- By eliminating tariffs and some non-tariff barriers, FTA partners get easier market access into one another's countries.
- Exporters prefer FTAs to multilateral trade liberalization because they get preferential treatment over non-FTA member country competitors.
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About CAROTAR Rules
- These Rules came into effect from September 21, 2020.
- It was notified on 21st August 2020.
- It empowers the customs officers to ask the importer to furnish further information, consistent with the trade agreement, in case the officer has reasons to believe that the country-of-origin criteria have not been met.
Where the importer fails to provide the requisite information, the officer can make further verification consistent with the trade agreement.
