WT/COMTD/RTA/6/2/Rev.1  
 
7 April 2016  
(16-1976)  Page: 1/7  
Committee on Trade and Development 
Dedicated Session on Re gional Trade Agreements  Original: English/Spanish  
 
PREFERENTIAL TRADE AGREEMENT BETWEEN MERCOSUR AND INDIA  
(GOODS) 
QUESTIONS AND REPLIES 
Revision 
 The following communication, dated 6 April 2016, is being circulated at the request of the 
Parties to the Preferential Trade Agreement (PTA) between MERCOSUR  (Argentina, Brazil, 
Paraguay and Uruguay) and India.  
 The document reproduces the questions a ddressed to the Parties and the responses 
submitted.  
 
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Questions from the delegation of Ecuador 
 
Question 1 
 
Paragraph 4.3 (Accession and Withdrawal) st ates that there is no provision for 
accession by third parties to the Agreement.  
Has consideration been given to the possib ility of Venezuela, as  a MERCOSUR member, 
acceding to the Agreement? What would be the procedure to follow?  
The signatories Parties to India-MERCOSUR PTA ar e Brazil, Argentina, Paraguay and Uruguay, and 
India as per Article 1 of Chapter 1 of the Agreem ent. Venezuela is a member of MERCOSUR but is 
not a signatory Party of this Agreement. So far it has not expressed any interest to join the PTA. In case, Venezuela evinces any interest in joining the PTA, the conditions of accession shall be 
subject to the understanding between India and MERCOSUR members who are Parties to the 
Agreement.  
The procedure would be, first of all discussing the issue in the Joint Administrative Committee of 
the Agreement which is responsible for the administration of this Agreement (as contained in Chapter XII: Administration of the Agreement). This Committee is composed of the MERCOSUR 
Common Market Group or their representatives and the Secretary of Commerce of the Republic of 
India or his representatives.  As mentioned in paragraph 4.3 of the Factual Pr esentation, the Agreement MERCOSUR-India does 
not include accession clauses of third Party. Ther efore, the conditions of accession should be 
subject to the Agreement of India as counterparty.  As this is a fixed preference Agreement with 
limited coverage in terms of products, it is expected that a new member of MERCOSUR who wish 
to join the Agreement of this block with India,  respects the terms of the Agreement entirely. 
 Question 2 
 Paragraph 3.13 (MERCOSUR's liberalization schedu le) states that "[c]hart 3.2 illustrates 
the average tariff reduction, and the equivale nt MOP, by HS Section and by MERCOSUR WT/COMTD/RTA/6/2/Rev.1 
 
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  member country (…). Overall, the highest MOP is provided by Brazil, followed by 
Argentina, Uruguay and Paraguay, with the average effective MOP varying from 0.64% 
to 0.48%."  
Could you please explain to us how the di fferent MOPs between the MERCOSUR member 
countries were determined if the Ag reement was negotiated as a bloc? 
 
The Agreement was negotiated effectively in block and preferential margins that MERCOSUR 
granted to India in the PTA make up a single list (preferential margins of 10%, 20% or 100% of the MFN rate applied to 452 tariff lines).  
The indicator "margin of preference equivalent" is the difference between the preferential tariff and 
the MFN tariff applied by each country and is built  based on preference margins established in the 
Agreement (single list), the MFN applied by each  country and national tariff lines of each 
MERCOSUR member corresponding to 452 tariff codes MERCOSUR Common Nomenclature (MCN). 
 The variation in these preferential margins by count ry is associated with the MFN tariffs applied by 
different countries members of MERCOSUR in 2009 and to the difference in the number of tariff 
lines in the national nomenclatures associated with the 452 MCN codes (8 digits of SA).  Paragraph 3.6 of the report provides information on this point. 
 It should be considered that the Common External Tariff (CET) is not the same for all positions to 
the tariff applied by countries members of MERCOS UR since there are exceptions to the CET on 
some products. 
 
Question 3 
 
According to paragraph 4.11, (Relationship with other agreements concluded by the 
Parties), "Article 8 provides that, in case of the conclusion of preferential agreements by 
the Parties with third parties, the other Party shall upon request afford adequate 
opportunity for consultation on any additi onal benefits granted therein; as of 
August 2015, no consultations were requested." 
 What is the purpose of the consultations on additional benefits granted in agreements 
with third parties? Has there been any thou ght of harmonizing the additional benefits 
from other agreements for the benefit of the Preferential Agreement MERCOSUR – India? 
 
Both paragraph 3.4 and paragraph 4.11 mentions about Article 8 of the PTA which provides that if a Contracting Party concludes a preferential Agreement with a non-Party, it shall upon request from the other Contracting Party, afford adequate opportunity for consultations on any additional 
benefits as granted therein. The PTA does not pr ovide an MFN clause regarding the preferential 
treatment granted in other agreements signed by the members of PTA MERCOSUR-India due to 
which there is no real obligation of any of thes e Parties to extend to each other the preferences 
granted to third countries.  
 Question 4 
 Regarding Table 4.1 – India and MERCOSUR: Pa rticipation in other RTAs (notified and 
non-notified in force), as of 18 August 2015:  
Why is the Economic Complementarity Agre ement between the Andean Community and 
MERCOSUR not included in the mentioned table?  
In Table 4.1 is included the Economic Complementation Agreement CAN-MERCOSUR appearing as 
Economic Complementation Agreement No. 59. In addition, also in the table is the Economic Complementation Agreement No. 58 MERCOSUR-Peru. 
 WT/COMTD/RTA/6/2/Rev.1 
 
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  Questions from the delegation of the United States  
 
Question 1 
 
Paragraph 2.2 on page 5 of the Factual Pres entation notes that Venezuela, which later 
acceded to MERCOSUR, is not party to the Agreement. Does Venezuela plan to become a party to the Agreement? Are there plans in th e future to expand the Agreement to other 
MERCOSUR to the associate member countries  including Bolivia, Chile, Peru, Colombia, 
Ecuador and Suriname?  According to Article 1 of Chapter 1 of the Agreement, the Signatory Parties to the Agreement are 
Argentina, Brazil, Paraguay, Uruguay and India. Although Venezuela is a member of MERCOSUR, 
till date it has not communicated its interest to join the Preferential Trade Agreement MERCOSUR-India. 
 
As mentioned in paragraph 4.3 of the Factual Presentation, the MERCOSUR-India Agreement does not include accession clauses for third parties. Ther efore, the conditions of accession must result 
from previous understanding with the Indian counterpart. As this is a fixed preference Agreement 
with limited coverage in terms of products, it is  expected that a new member of MERCOSUR willing 
to adhere to this Agreement with India should respect the terms of the Agreement as a whole.   
The accession process consists, first of all, of discussing the issue in the Joint Administration 
Committee of the Agreement which is responsibl e for the administration of this Agreement 
(according to Chapter XII: Administration of the Agreement). This Committee is composed of the 
MERCOSUR Common Market Group or its representa tives and of the Secretary of Commerce of the 
Republic of India or its representatives.  
With regard to the Associated member countries of MERCOSUR - Bolivia, Chile, Peru, Colombia and 
Ecuador, have Economic Complementation Agreements with MERCOSUR within the framework of the Latin-American Integration Association (LAI A) (as specified in Table 4.1 of the Factual 
Presentation), which has not provided any mechanism for associated member countries to join the 
agreements that MERCOSUR has with third countries or groups of countries. It is worth mentioning 
that Chile has a separate PTA with India.  
On 11 July 2013, Surinam signed a Framework Pa rtnership Agreement with MERCOSUR. In turn, 
Decision No. 13/13 of the Common Market Council assigns to Surinam the status of Associate State of MERCOSUR. The aforementioned Framewor k Agreement aims at promoting closer ties 
between Surinam and MERCOSUR, but there is no free trade agreement in sight between the 
Parties. 
 
Question 2 
 Paragraph 3.1 on page 6 of the Factual Presen tation states that "Preferential treatment 
under the Agreement is granted through margins of preference (MOP) on applied 
customs duties". How do the Parties approa ch the variety of taxes and custom fees 
imposed on imports by India such as landin g charge, countervailing duty, CEX, and CESS 
that are excluded from the Agreement bu t can be manipulated to marginalize any 
preferential/liberalization gains from the Agreement? 
 The preferential treatment in various trade agreements is granted with reference to the Basic Customs Duty i.e. customs duty leviable on impo rted goods under the First Schedule to India’s 
Customs Tariff Act, 1975. 
 In addition to Basic Customs Duty, an additional duty of customs is leviable on imported goods 
under section 3(1) of the Customs Tariff Act,  1975 (commonly known as CVD). This duty is 
equivalent to excise duty which is leviable on like goods manufactured or produced in India.  
Further, additional duty of customs is leviable on imported goods under section 3(5) of the 
Customs Tariff Act, 1975 (commonly known as special additional duty or SAD) @ 4%. This duty is 
levied so as to counter balance internal taxes such as sales tax, value added tax, local tax or any other charges leviable on a like article on its sale, purchase or transportation in India. 
 WT/COMTD/RTA/6/2/Rev.1 
 
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  Cesses levied as excise duty on domestically manufactured goods are also levied on imported 
goods.  Hence, duties other than the Basic Customs Duty, are levied on domestic goods also and 
therefore, provide a level playing field to the domestic manufacturers vis-à-vis  imported goods. 
 Therefore, these duties are excluded from the trade agreements. 
 
Question 3 
 Paragraph 3.1 on page 6 of the Factual Presen tation notes only very limited concessions 
on market access, 452 lines (at HS-8 digits) in the case of MERCOSUR and 450 lines in 
the case of India, and limited number agricu ltural products are included in this 
Agreement. What is the volume and value of  two way trade in agricultural products 
between the Parties? What's the percentage of agricultural products in the bilateral 
trade between the two Parties? How do the Part ies anticipate that the agricultural trade 
will be liberalized in the future? 
 
As per statistics of Directorate General of Commercial Intelligence and Statistics (DGCI&S), India, the total agriculture & allied trade between India and MERCOSUR was US$1862.92 million in 
2013-14 and US$2809.43 million in 2014-15. Percentage share of agri & allied trade in total 
mercantile trade between India and MERCOSUR during 2013-14 and 2014-15 was 16.20% and 
19.73% respectively. In terms volume, India’s bilateral trade in agriculture & allied trade was 2280.19 million units during 2013-14 and 3898.60 million units during 2014-15. 
 
Unlike Free Trade Agreement (FTA), under Preferen tial Trade Agreement (PTA), signatory trading 
partners allow to reduce import tariffs partia lly on mutually agreed selected tariff lines. 
 
The value of agriculture exports from MERCOSUR to India are as follows (The definition of 
agricultural products is according to Article 2 of the Agreement on Agriculture of the WTO; source: Penta Transaction, for Paraguay: Central Bank of Paraguay (BCP) and UN Comtrade): 
Exports to India are in Million U$D, 2015 
Signatory Party of the 
MERCOSUR-India PTA Export 
Total Agriculture 
Export Total % of Agricultural 
Exports 
Argentina 2,257 2,080 92.16% 
Brazil 3,617 1,109 30.66% 
Paraguay 193 188 97.04% 
Uruguay 14 10* 71.43% 
* The majority corresponds to Chapter 51, especially Wool. 
 
Question 4 
 Section 3.4 on page 14 of the Factual Presen tation states that the Parties agreed to 
cooperate in the areas of animal health and plant protection, food safety, mutual 
precognition of SPS measures. It also note s cooperation in the area of standards, 
technical regulations and conformity asse ssment procedures and that the Parties 
endeavor to conclude mutual equivalence ag reements. When do the Parties anticipate 
completing agreements in each of these areas? 
 
As indicated in Section 3.4 of the Factual Pres entation, both Parties have not exchanged any 
proposal so far in this regard. 
 
Question 5 
 
Paragraph 3.5, page 6 of the Factual Presenta tion states that 3,111 HS 8-digit lines for 
India and 1,287 HS 8-digit lines for ME RCOSUR are under review for further 
liberalization. Which HS lines or product categories are under review? When do the 
Parties anticipate completing the next round of liberalization?  
 
At the moment there is no formal proposal under discussion between India and MERCOSUR with regard to the expansion of the Agreement. WT/COMTD/RTA/6/2/Rev.1 
 
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  Question 6 
 
Table 4.1 on pages 19 and 20 list over 30 RTAs  that have not been notified to the WTO, 
as required under WTO rules. When do th e Parties plan to notify each of these 
agreements so that the required transp arency process on them can begin? 
 In the case of Regional Trade Agreements (RTA s) mentioned in table 4.1, MERCOSUR considers 
that these are concluded by MERCOSUR or MERCOSUR Member States within the framework of 
ALADI agreements which are not new agreements or autonomous, but legal instruments that apply the 1980 Treaty of Montevideo that established ALADI. 
In that sense, the Treaty of Montevideo has been notified to the WTO as a Regional Trade 
Agreement ("RTA") signed under the "Enabling Clause" (Decision of 28 November 1979 on 
"differential and more favourable treatment, reciprocity and fuller participation of developing countries "). 
In turn, the Latin American Integration Association (LAIA) Secretariat presents a list of the 
agreements to the WTO Secretariat biannually. 
Regarding non-notified RTAs mentioned against India in the table 4.1, India- ASEAN Agreement on 
Services has already been notified [S/C/N/822 dated 24 August, 2015]. Other two RTAs are in the process of Notification. 
 
Question 7 
 
Paragraph 28 of the Nairobi Ministerial Declarations states that: 
 
We reaffirm the need to ensure that  Regional Trade Agreements (RTAs) 
remain complementary to, not a substi tute for, the multilateral trading 
system. In this regard, we instru ct the Committee on Regional Trade 
Agreements (CRTA) to discuss the syst emic implications of RTAs for the 
multilateral trading system and their relationship with WTO rules. With a 
view to enhancing transparency in, and understanding of, RTAs and their 
effects, we agree to work towards the transformation of the current 
provisional Transparency  Mechanism into a permanent mechanism in 
accordance with the General Council Decision of 14 December 2006, without 
prejudice to questions related to notification requirements. 
Given that this language was proposed in Na irobi by Brazil, could Brazil please explain 
how WTO Members will be in a position to "dis cuss the systemic implications of RTAs for 
the multilateral trading system and their relati onship with WTO rules" when such a large 
number of Mercosur’s RTAs have not been no tified to the WTO, and thus WTO Members 
are unable to evaluate the contribution of  these non-notified RTAs to the system? 
 
The Doha Round negotiations resulted in the progress on transparency in preferential trade 
agreements under the GATT, GATS and the Enab ling Clause (L/4903). In that context, the 
following Decisions were adopted: Decisions WT/L/671, of 14 December 2006 -applicable to regional trade agreements -  and Decision WT/L/806 of 14 December 2010- applicable to 
preferential trade agreements. The spirit that guided these two decisions was to increase the 
transparency of all preferential trade mechanisms  that deviate from the core principle of the 
multilateral trade system: the Most Favored Nation principle. 
 
Brazil remains fully committed to the goal of tran sparency as a means to ensure compatibility of 
regional and preferential trade agreements with th e multilateral trade system. Brazil observes its 
notification commitments directly together with other members of the agreements in which it 
participates or through the Secretariat of LAIA for agreements to which the provisions of the 
Treaty of Montevideo 1980 apply, as indicated in the previous response. Finally, Brazil reiterates 
its expectation that the commitments made by all Members are fully met, particularly when those 
Members that have increased participation in global trade flows and whose agreements have 
consequently greater potential systemic impact are concerned.  WT/COMTD/RTA/6/2/Rev.1 
 
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  Question 8 
 
According to Table A1.4 on page 26, und er the Agreement MERCOSUR received no 
preferential treatment for their 25 top expo rts and India only gained preferential 
treatment on a few lines. What is the overarching goal, in te rms of economic benefit, if 
the products with the greatest competitive ad vantage from either party is excluded from 
the Agreement and, thus, liberalization?    
 
This Agreement is a first step between MERCOSUR and India. Both sides recognize that there is a 
need for expanding the preferences granted by th e Agreement with the aim of achieving greater 
trade liberalization, to be negotiated between the Parties. 
 
Question from the delegation of Canada  
 
With respect to Section 3.4.1.1 of the Secretariat’s report:  
 Canada notes with interest that India and MERCOSUR have agreed to cooperate in the 
area of mutual recognition of sanitary and phytosanitary (SPS) measures by way of the 
PTA.  Canada would be interested in learni ng about any cooperation related to mutual 
recognition of SPS measures that may have taken place since entry into force of the 
PTA, including through recent discussions to expand the agreement. 
 
As indicated in Section 3.4 of the Factual Pres entation, both Parties have not exchanged any 
proposal so far in this regard. 
 
Questions from the delegation of Colombia  
 
3 PROVISIONS ON TRADE IN GOODS 
3.1 Import duties and charges, and quantitative restrictions 
3.1.1 General provisions  
Paragraph 3.1. Preferential treatment under the Agreement is granted through margins 
of preference (MOP) on applied "customs du ties" (Article 5). Annexes I and II list the 
products and the MOP granted respectively fr om MERCOSUR to India and from India to 
MERCOSUR (Article 3). These MOP – at 10%, 20% or 100% of the applied MFN rate – 
are granted for (originally) 452 lines (at HS-8  digits) in the case of MERCOSUR and 
450 lines in the case of India; they are listed on the basis of the Harmonized System 
(HS). 
Paragraph 3.5. In the context of the seco nd meeting of the Joint Administration 
Committee, held in India in June 2010, disc ussions on further liberalization under the 
Agreement were held on the basis of "wish lists" of India and MERCOSUR (of 
respectively 3,111 and 1,287 HS 8-digit lines ). As of August 2015, these lists are under 
review with a view to further discussion on the subject.  
Question 1 
 
Could the Governments of India and MERC OSUR please indicate whether in the 
discussions regarding "wish lists" for the deepening of the Agreement in respect of 
3,111 and 1,287 lines, for India and MERCOSUR, respectively, consideration is being given to margins of partial preference (1 0%, 20%, etc.) or total elimination with a 
timetable for annual reduction. 
 
At the moment there is no formal proposal under discussion between India and MERCOSUR with regard to the expansion of the  Agreement. 
 WT/COMTD/RTA/6/2/Rev.1 
 
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  Question 2 
 
Could the MERCOSUR Governments please indi cate whether the 1,287 lines of the "wish 
list" will have "equal" preferential treatmen t for the four countries if the respective 
negotiations with India are concluded. 
 As stated in Chapter II, Article 3 of the Agreement,  the list of  products in relation to which the 
MERCOSUR grants tariff preferences to India was en  bloc. It is expected that there will be a 
common list for the four  countries if the current agreement is expanded. 
 4 GENERAL PROVISIONS OF THE AGREEMENT 
 
4.7 Other 
Paragraph 4.13. The Agreement does not cover issues such as trade-related intellectual 
property rights nor government procurement. 
 Question 3 
 Could the Governments of MERCOSUR and Indi a please indicate whether they plan to 
negotiate trade-related intellectual property and government procurement in the future. 
 
No negotiations on trade-related intellectual property and government procurement have taken 
place. 
 
Question 4 
 
If not, does MERCOSUR have any legal limitat ion on negotiating the issues of intellectual 
property and/or government procurem ent in the Agreement with India? 
 MERCOSUR has no legal limitations on negotiating these issues.  
 
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