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Philippines refuse to open up its services market to Indian professionals

Economic Times | 17 Aug, 2011

Philippines refuse to open up its services market to Indian professionals

Amiti Sen, ET Bureau

NEW DELHI: The Philippines has refused to make any meaningful offer to open up its services market to Indian professionals, thus playing the spoilsport in the recent India-Asean services negotiations in Indonesia.

"Trade ministers from other Asean countries blamed the Philippines for the delay in the services negotiations and suggested that India should talk separately to the country," a government official told ET.

Consequently, Commerce and Industry Minister Anand Sharma had a bilateral meeting with his Filipino counterpart Gregory L Domingo to push India’s cause, but the country did not show much flexibility. The Philippines maintained that it had to protect its services sector as it was vulnerable and the country’s laws did not allow opening of the sector. "The minister said that the country had not offered much even to other Asean countries," the official said.

While individually each of the 10 members of Asean are making offers to India for opening up their services sector, an agreement can be signed only when all countries are agreeable to the entire pact.

India and the Asean implemented a free trade agreement in goods last year, but the Asean has been dragging its feet on a services and investments agreement that was to follow. India stands to gain substantially from a services agreement as there is a lot of scope for IT, healthcare, education and other professionals in the Asean countries. It benefitted much less from the goods agreement, as the Asean region already had low tariffs on goods and the FTA would not lead to steep reduction in duties. Sharma met his counterparts from the Asean countries at the ninth Asean Economic Ministers-India consultations in Indonesia last week.

In his meeting with Domingo, Sharma pointed out that the revised offer given by the Philippines for opening up its services sector was low in ambition and not commensurate with its economic status. The Philippines has put on the table very limited sectors, none of which has commercial value for India. India argued that the country had not offered commitments in sectors and modes of commercial interest to India, including computer-related and other business services, even though it has been offered to other FTA partners in some cases.

Sharma also asked other Asean members to improve their offers and go beyond what had been put on the table at the World Trade Organisation, or the WTO. India wants to conclude the services and investment agreement by November this year, but it would not make much sense if there are no better offers.

Bilateral trade between the Asean and India jumped 24% in 2010 to $ 51.3 billion. India’s exports grew at 33% to $23.1 billion while imports from the Asean increased by 18% to $ 28.2 billion. Foreign direct investments (FDI) inflows from the Asean touched $14.25 billion in May 2011 and accounted for 10.36% of India’s total FDI.

India is negotiating bilateral deals with individual Asean countries to gain access into the Asean services market. It already has a deal with Singapore and Malaysia and is negotiating ones with Indonesia and Thailand. The Asean includes Brunei, Cambodia, Malaysia, Indonesia, Thailand, Vietnam, Laos, Singapore, Vietnam and the Philippines.

 source: Economic Times