January 28, 2006
India for pan-Asian trade agreement
Asean seeks ties with China, Korea & Japan
Davos, Jan 27 - India on Friday expressed its desire for eventually expanding the proposed comprehensive economic cooperation agreement (Ceca) with Asean to a pan-Asian pact covering six more countries including Japan, China, Korea, Australia and New Zealand, aiming at a common economic community in East Asia.
Finance minister P Chidambaram said at a meeting with Asian leaders and the Asian Development Bank president H Kuroda here at the World Economic Forum that India had already signed framework agreement for free trade with Asean last year. But the minister outlined the need for a comprehensive economic treaty that takes care of investment and other financial matters.
After the South Asian Free Trade Area ratification and the Ceca with Singapore, India would sign a Ceca with Asean soon.
A senior official from an Asean country, however, cited the association’s discord with India on the formulation of the Rules of Origin (which is meant to avoid occurrence of trade deflection under the guise of the proposed pact) as a stumbling block. The official also highlighted the substantial headway that has already been made by Asean towards formation of a trade bloc comprising Asean, China, Japan and Korea.
Asean and China have already finalised the framework for a free trade pact, which is slated to be fully operational in 2010. A similar agreement with Korea is in the works, too. A bloc that comprises Asean and the three Asian countries (China, Japan and Korea) would cover 86% of East ASian Trade.
Among Asean countries, 99% of trade is already tariff-free.
To a query on whether India could sign a FTA with China, Chidambaram said “it is not inconceivable. Trade with China is growing very fast. Some time in future there could be a FTA with China,” he said.
He also said there was a need to develop a asian bond market where Asian nations could invest a significant portion of their burgeoning forex reserves.
There was also a need to set up a asian monetary fund, he said. “We will engage in dialogue (for all these initiatives),” he added.