Thursday, 25 January 2018

Trade remains sore point between India, ASEAN

Trade remains sore point between India, ASEAN

Indonesia, Cambodia yet to ratify pact on services and investment signed in 2014

While all 10 leaders from the Association of South-East Nations (ASEAN) have gathered in India to celebrate India’s 68th Republic Day, two-way trade continues to remain a pain-point in the ties even as both sides look at strengthening strategic ties.

India and ASEAN signed the trade pact on services and investment in September 2014. However, out of the 10 member countries, two are yet to ratify the treaty – Indonesia and Cambodia. In the case of Indonesia, it believes that if it signs the agreement, then Indian professionals will flood their markets, in other words, take their jobs away, sources told BusinessLine.

India had been urging ASEAN countries – Singapore, Thailand, Malaysia, Cambodia, Myanmar, Brunei, Laos, the Philippines, Indonesia and Vietnam – to ratify and implement the services pact at the earliest as it continues to get impacted by the free trade agreement (FTA) in goods, sources said.
India and ASEAN had signed the goods FTA in 2009 and it was implemented in 2010. However, under the pact while imports from ASEAN countries have seen a rise, exports from India to that region have not seen a significant jump.

During his bilateral meeting on Thursday with Indonesian President Joko Widodo, Prime Minister Narendra Modi is expected to raise this issue.
On the other hand, Cambodia is not ratifying it because of its internal legislative issues, said another official, involved in the talks.

“Indonesia has always been wary of India flooding their jobs market. And this is unlikely to change if one goes by their posturing in RCEP, which is in limbo. The traditional market access issues with ASEAN remains. They will continue to put India in tenterhooks unless India agrees to be flexible in RCEP,” said Biswajit Dhar, Economics Professor, Jawaharlal Nehru University.
All the 10 ASEAN countries are also part of the China-led proposed mega trade pact – Regional Comprehensive Economic Partnership (RCEP) – which also includes India, Japan, South Korea, Australia and New Zealand.

However, India is now looking at ASEAN more from the strategic perspective in terms of maritime security rather than enhancing trade. This is crucial to counter China as ASEAN seeks greater participation from India even as they face Beijing’s expansionist policy in South China Sea.
“The ratification will happen soon. However, the government is now more focussed on maritime cooperation and security, especially in the backdrop of India becoming a rising power in maritime links and rise of the Indo-Pacific region,” said Prabir De, Professor, Research and Information System for Developing Countries (RIS), and Coordinator, ASEAN-India Centre (AIC), India.
This is for the first time that all 10 leaders of the ASEAN region have participated in the Republic Day celebrations as chief guests.


'FTA in goods between India and Asean will boost trade

Press Trust of India, New Delhi, Jan 23 2018

Full implementation of the free trade agreement (FTA) in goods between India and the Asean bloc will help boost trade between the two regions, Minister of State for Commerce and Industry C R Chaudhary said.

The minister said however, connectivity and infrastructure are major challenges to further push the trade ties between India and the Association of South East Asian Nations (Asean).
India and the 10-nation bloc signed the FTA in goods in 2009. Under the pact, two trading partners set timelines for eliminating duties on maximum number of goods traded between the two regions.
The 10 Asean members are Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam.

The agreement has resulted in increase in trade, and "once the full implementation of tariff (or basic customs duties) reduction scheduling is done", it is expected to create more trade opportunities for both the sides, he said at the Asean-India Business and Investment Meet and Expo being held here.
Chaudhary said both the regions are working to improve connectivity and infrastructure to promote trade and investments.

"India is working with Asean on multiple connectivity projects," he said, adding that the country has made considerable progress in the construction of trilateral highway -- India-Myanmar-Thailand.
He also said that the Asean India maritime transport cooperation agreement will help in enhancing cooperation and communication between the two regions besides removing barriers for increasing maritime trade.

There is also a proposal to establish rail link between India and Vietnam.
India's exports to Asean increased to about USD 31 billion in 2016-17 from USD 25.15 billion in the previous fiscal. Imports too grew to USD 40.61 billion in 2016-17 from USD 40 billion in the previous year.

The commerce ministry said in a statement that the Asean -India expo is showcasing products and services in areas including manufacturing, engineering, ICT, healthcare, tourism, environment, agriculture, Science & technology, logistics and retail.  


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