To end the deadlock on services pact with the ten-member Asean, India has decided to negotiate separate pacts with the key member states of the trade bloc. Commerce ministry sources said India plans to enter bilateral comprehensive trade pacts with key Asean member countries to help it tap the restricted trade in services. The exercise is also seen as a potent vehicle to build peer pressure on other group countries to speed up the services negotiations.
India had signed a Comprehensive Economic Cooperation Agreement (Ceca) with Singapore in 2005 and now plans to launch a Free Trade Agreement (FTA) with Indonesia soon to put in place a Ceca.
It also hopes to conclude dialogue on a comprehensive FTA with Thailand covering investment, services and trade in goods later this year and has already stitched up a Ceca with Malaysia earlier this year.
The intention is put FTA negotiations in the region on the on fast track as part of our aggressive trade diplomacy with Asean countries, a government official said and added FTA negotiations with a few other Asean countries may also be launched soon. ?Thailand, Brunei and Indonesia are the big Asean markets which already have a large Indian expat population. Stitching bilateral trade pacts with these member countries is the key,? the source added.
Asean is a powerful trade block of countries such as Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand.and Vietnam. Explaining the rationale behind the strategy (on individual trade pacts with Asean countries), another government source told FE that India?s negotiations with Thailand and Indonesia for comprehensive trade pacts started way back in 2007.
?While the framework for Indo-Asean trade agreement was finalised in 2003, by around 2007 we realised that Asean members were still reluctant to give India any room in services that is when we started talking to Thailand and Indonesia,? the source said.
?There is another economic logic to the process,? a Delhi-based trade analyst said. He explained that once India enters into a multilateral framework on services with Asean, New Delhi would have to honour the negative list of all the ten countries. While India would in all likelehood have just one negative list. ?It is unlikely that Asean countries would reach any consensus on the negative list. Hence they would put on the table individual negative lists, which India may not be in favour of,? he added.
Assistant secretary general at Ficci, Manab Majumdar, said, ?Indian industry is hopeful that services would be concluded despite the differences. Till the time service negotiations are completed bilateral trade agreements with member countries would be a good option.? Majumdar added that Singapore, Thailand, Malaysia and Indonesia are the major Asean nations.
Last week, Thailand Prime Minister Abhisit Vejjajiva led a business delegation to India and held meetings with both Manmohan Singh as well as commerce minister Anand Sharma. Following the talks, Sharma had said that he hoped to conclude the FTA dialogue by the end of the year. ?We are currently engaged in negotiating India-Thailand free trade agreement (FTA), which will embrace in its fold, investment, services and trade in goods, and we are committed to conclude negotiations by end of this year,? he had said.
In March senior trade ministers from the Asean countries had visited the capital to take stock of the progress of the FTA. The ministers hoped that by 2012 bilateral trade between the two blocs would increase 40% to $70 billion from $50 billion in 2010. They also exuded confidence that trade in investments and services would be concluded by 2011-end, however analysts disagree.