MINT sourced by HT Media Ltd | Jan 03, 2011
India pushing for services pacts with individual Asean members
Another commerce ministry official said, also on condition of anonymity, that a long pending proposal for a Ceca with Indonesia may be reopened during the visit of Indonesian President Susilo Bambang Yudhoyono in January.
Changing its strategy, India is aiming to enter comprehensive bilateral trade agreements with more individual members of the Association of Southeast Asian Nations, or Asean, as a services agreement with the multilateral body remains elusive. Asean groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. India signed a free trade agreement, which covers goods, with Asean in August 2009. It came into effect in January 2010, eliminating tariffs on 80% of traded goods. But a comprehensive agreement covering services and investment has been delayed as Asean has been demanding a single offer for all its members, whereas India insists on making a different offer for each country. "In the 10-member grouping, Singapore, Malaysia, Indonesia and Thailand are the big four economies of our interest, though Philippines is the only outlier. Bilateral comprehensive agreements with these economies will compensate for lack of a services agreement with the Asean grouping," said a senior commerce ministry official on condition of anonymity. India already-since 2005- has a comprehensive economic cooperation agreement, or Ceca, with Singapore which includes trade in goods, services and investment.
It has concluded negotiations for a similar pact with Malaysia, which will come into effect in July. Another commerce ministry official said, also on condition of anonymity, that a long pending proposal for a Ceca with Indonesia may be reopened during the visit of Indonesian President Susilo Bambang Yudhoyono in January. Yudhoyono is the chief guest for the 26 January Republic Day parade. A study group set up by India and Indonesia had favoured a comprehensive bilateral trade agreement, but domestic opposition to the proposal in Indonesia scuttled it. Indonesia’s business associations also lobbied hard to stall a trade agreement between Asean and China beginning 1 January 2010, fearing it would hurt the domestic manufacturing industry. The second commerce ministry official said Thailand, too, is keen to start negotiations for a Ceca with India. Under an early harvest scheme since 2004, India and Thailand have eliminated tariff on 82 items. Rajiv Kumar, director of India’s industry lobby Federation of Indian Chambers of Commerce and Industry, or Ficci, backed the strategy of engaging Asean members bilaterally.
"With the coverage of the four major economies in the Asean region, only the CLV (Cambodia, Laos and Vietnam) countries will be left. We have good relations with Vietnam, so we can start discussions for a bilateral trade agreement later," Kumar said. He said the Philippines is the only major economy blocking the India-Asean services pact, being a competitor of India in the services market on the global stage. The goods-only India-Asean free trade agreement is considered a strategic mistake, and India has already decided that talks for all future trade agreements should cover trade in goods and services simultaneously. India has a strong services sector led by its developed software industry and well-trained manpower. Following this decision, India has completed comprehensive bilateral trade agreements covering both goods and services with Japan and South Korea. Talks for a similar agreement with the European Union are also on.