Prime minister Manmohan Singh said at the recent ASEAN-India Summit in Phnom Penh, Cambodia, that he hoped to conclude the services and investment components of the FTA before December when the ASEAN commomerative summit will be held in New Delhi.
While New Delhi has been insisting that the ASEAN offer is mbelow expectations due to limited commitments offered by the association regarding movement of natural persons, ASEAN is insistent on removal of the category of intellectual property (IP) from the definition of categories of natural persons. Besides, there are other outstanding issues like definition of investment, exclusion of IPR, portfolio investments, claims to money, permanent resident and indirect expropriation.
India and ASEAN already have a trade in goods agreement in place since 2009, which focuses on tariff liberalisation on mutually agreed tariff lines from both the sides and is targeted to eliminate tariffs on 80% of the tariff lines accounting for 75% of the trade gradually. Moreover, India had entered into a liberal goods agreement with the implicit understanding that the balance will be achieved in the services negotiations with the 10-country trading bloc.
However, there are differences in modalities as far as the services and investment are concerned.
India has been asking for opening up of the Mode 4 category, which has been opposed by Indonesia and the Philippines because of unemployment issues in these countries.
India had scaled down its request to the ASEAN-Australia-New Zealand FTA (AANZFTA) level and even this request was not accepted. The ASEAN offer is below expectations and they have offered very limited commitments in Mode 4 as detailed Movement of Natural Person Annex is not included, said a commerce ministry official. Mode 4 covers natural persons who are either service suppliers (such as independent professionals) or who work for a service supplier and who are present in another WTO member to supply a service.
Besides, India is insisting on having at least a limited Annex with common definitions for the various categories of natural persons on which future commitments can be made.
Incidentally, the Trade and Economic Relations Committee (TERC) headed by the prime minister recently suggested that since intensive efforts to narrow differences on investment have failed so far, New Delhi could propose an Investment Promotion Chapter rather than Investment Protection Chapter for which ASEAN would like to seek directions at the highest level.
In fact, the committee had directed the government to conclude negotiations on services on the basis of current offers with whatever improvements are made by Indonesia and the Philippines. India has bilateral FTA with Singapore and Malaysia and is negotiating with Thailand.