A growing number of Asian economies are looking to each other for trade and investment. In this vein, a strategic trade partnership pact – the Comprehensive Economic Cooperation Agreement (the CEPA) between India and South Korea entered into force on 1 January 2010.
The CEPA is a de facto free trade agreement adopted to facilitate comprehensive economic relations including merchandise and service trade, investment and economic cooperation. The pact is expected to increase existing trade between India and Korea (USD 15.6 billion as of 2008) by as much as USD 3.3 billion annually. It aims to grow bilateral trade primarily by decreasing tariffs, encouraging investment and promoting the exchange of skills between the two countries.
There are a number of provisions within the CEPA relating to investment protection and investor-State arbitration. Similar agreements among other Asian nations provide for a framework of “safe investment”. For instance both the ASEAN-India and the ASEAN-China Framework Agreements on Comprehensive Economic Co-operation (which also came into force on 1 January 2010) have provisions for the “protection of investment” in order to promote a “liberal, facilitative, transparent and competitive investment regime”.
Both India and Korea are keen to tap new markets as the impact of the global financial crisis is slowly beginning to fade. Investment protection provisions contained within the various free trade agreements in Asia will provide an impetus to investment and trade between Asian nations. These should prove to be particularly effective, at a time when Asian destinations are vying for attention for investment.