CECA vs FTA
International trade, though now a days guided by the rules and regulations of World Trade Organization, is not free from protectionism in the form of trade barriers. This is why countries, on a bilateral level, try to enter into economic pacts and agreements that are more fruitful to both the countries and help in increasing the level of trade, both in goods and services. This is why we keep on hearing about CECA, CEPA, and FTA between nations. Different nomenclatures are necessary to make it clear how and what the treaty or pact proposes and what it means in real terms to the business communities on both sides of the agreement. Let us find out the differences between CECA and FTA in this article.
What is CECA?
CECA stands for Comprehensive Economic Cooperation Agreement and is meant to increase bilateral trade. It is the second step in having better trade relations as it is set up after deliberations held by a joint study group that comprises members of both participating countries. For example, though India is a regional super power, its trade with Japan is a mere 0.44% of the global Japanese trade. To correct this imbalance and to further trade ties between the two countries, India and Japan set up a JSG that recommended CECA between the two countries that aims to improve bilateral trade by gradually removing trade barriers.
What is FTA?
FTA stands for Free Trade Area or Free Trade Agreement. It normally comprises more than two countries that represent a bloc and have shared interests, both because of geographical as well as cultural similarities. A group of countries sit together to remove trade barriers quotas and preferences to create a free trade area that has the capability to increase trade between participating countries. FTA takes into account both goods and services.
CECA vs FTA
• CECA and FTA are both economic agreements that are intended to boost trade between countries
• While CECA is bilateral, FTA normally involves a group of countries that have geographical and cultural similarities
• Both aim to boost trade by gradual elimination of barriers, quotas and preferences.