‘Regional grouping will boost mutual gains’

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: In the latest Association of Southeast Asian Nations (Asean) economic ministers or AEM—the India consultation that was held on August 28, 2008 in Singapore, the ministers declared that the Asean India-FTA negotiations have been concluded and the agreement will be signed during the summit meeting in December 2008. The FTA in goods is likely to be implemented early next year.

India’s engagement with Asean started with its ‘Look East Policy’ in the year 1991. Asean’s political and strategic importance in the larger Asia-Pacific region and its potential to become a major partner of India in the area of trade and investment has encouraged India to seek closer linkages with these countries.

A joint study on ‘AFTA (Asean Free Trade Area)-India Linkages for the Enhancement of Trade and Investment’, was conducted by the Indian Institute of Foreign Trade (IIFT), and the Malaysian Institute of Economic Research (MIER). In its report in May 2002, the study drew the roadmap for closer economic relationship between India and Asean and suggested a number of steps to increase the trade and investment flows between India and Asean, which emphasised the need for having a regional trade and investment agreement (RTIA) between India and Asean as its long-term objective.

In the first Asean Economic Ministers (AEM)—India consultations were held in September 2002 in Brunei Darussalam Asean-India Economic Linkages Task Force (AIELTF) was established for preparing a framework agreement to enhance the Asean-India trade and economic cooperation. The framework agreement on comprehensive economic cooperation between Asean and India was signed on October 8, 2003 during the second Asean-India Summit in Bali, Indonesia.

The framework agreement prescribed for starting negotiations for FTA in goods and agreements on services and investment. It also suggested having economic cooperation on several areas of mutual interest, including trade facilitation and harmonisation of customs procedures. The framework agreement prescribed that there should be reciprocity between India and Asean—six (Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand), but India should provide special and differential treatment to the remaining four members of Asean—Cambodia, Lao PDR, Myanmar and Vietnam (new members of Asean).