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Sharma to push Asean on services deal this week

Business Standard | August 10, 2011

Sharma to push Asean on services deal this week

Nayanima Basu / New Delhi

Trade ministers from the 10-member Association of Southeast Asian Nations (Asean) and India’s minister of commerce and industry, Anand Sharma, meet this week to push the much-awaited services trade deal, that got stuck over the issue of movement of professionals.

This would be from Thursday to Saturday, in the backdrop of the Asean economic ministers meet in Manado, Indonesia. Once the deal was concluded, the trade agreement would become a Comprehensive Economic Partnership Agreement (CEPA), as India already has a free trade agreement (FTA) in goods with the bloc. Indonesia chairs Asean this year.

While negotiations for both started together, the deal on services got stuck due to concerns raised by certain countries on the issue of movement of professionals and an easier visa regime for them. Under the services sector, India had been demanding greater opening in the Mode IV category, so that more and more professionals such as doctors, nurses, chefs and accountants get greater job opportunities in Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, which make the Asean bloc. “A services deal did not find integration in the pan-Asean agreement. The main problem is while they are willing to relax the provisions for us, they are not ready to offer the same status to their fellow-members. Hence, it is much easier to negotiate bilaterally,” a senior commerce department official told Business Standard.

The Asean countries have a diverse membership. There are countries such as Singapore, Malaysia, Thailand and Indonesia that are referred to as preferred financial hubs and Myanmar, Cambodia and Laos which are much poorer, the official said.

As a result, India is engaged in bilateral negotiations for a comprehensive treaty with both Thailand and Indonesia, which have agreed to “more access than in the regional (Asean) arrangement,” the official added.

The services sector contributes 55 per cent of India’s gross domestic product.

Sharma is also expected to initiate the first round of bilateral talks with Thailand informally for a Comprehensive Economic Cooperation Agreement. Earlier this year, both countries had decided to conclude the deal by March 2012 by doubling two-way trade to $12 billion by 2014 from $5.9 bon at present.

However, since there had been a change of government since then, the deadline might not be met. A high-level trade delegation under their new trade minister is expected to visit India by the end of this month for holding the first round of formal negotiations, the official added.

Meanwhile, on August 1, all the 10 Asean countries implemented the goods deal, triggering the tariff liberalisation to take place. It was to implemented on January 2010 but was yet to be ratified by the Philippines and Cambodia.

 source: Business Standard