Difference Between CECA and FTA
International trade, although nowadays guided by the rules and regulations of World Trade Organization, is not free of protectionism in the form of trade barriers. Therefore, countries on a bilateral level, try entering into agreements and economic pacts fruitful for both countries and help in increasing the level of trade in both goods that services. That’s why we continue to hear CECA, CEPA and FTA between nations. Different classifications are necessary to clarify how and what the treaty or agreement proposes and what that means in real terms to the business communities on both sides of the agreement. Let us explore the differences between the CECA and FTA in this article.
What is CECA?
The CECA indicates the Comprehensive Economic Co-operation Agreement and helps to increase bilateral trade. This is the second milestone involved in having better business relations as it is established after deliberations by a combined study group which includes members from both countries participating. For example, although India is a major regional power, its trade with Japan is just 0.44% of total Japanese trade. Correct this imbalance and to further business links between the two countries, India and Japan established a JSG that has recommended CECA between the two countries that have an intention of improving bilateral trade by slowly removing trade barriers.
What is FTA?
FTA is the Free Trade Area or Free Trade Agreement. It usually includes more than two countries that represent a block and have common interests, both because of the similarities regarding culture as well as geography. A group of countries sit together to remove trade barriers, quotas and preferences to create a free trade area that has the ability to increase trade between participating countries. FTA discusses both goods and services.