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India, ASEAN clear FTA hurdle

SINGAPORE: A hurdle in the run-up to the signing of India’s Free Trade Agreement (FTA) with the Association of Southeast Asian Nations (ASEAN) has been crossed. With the unexpected issue of “reciprocity” over each other’s “negative list” resolved, India’s first-ever trade pact with an economic bloc is likely to be signed at Chiang Mai in Thailand next month, diplomatic sources said.

The event is being projected as the highlight of Prime Minister Manmohan Singh’s likely participation in the India-ASEAN meeting and the East Asia Summit there. The venue of both these summits, scheduled for the second half of December, has been shifted to Chiang Mai from Bangkok, in view of the political unrest in the Thai capital.

If the ASEAN-India deal, which has taken nearly six years to negotiate, is finally inked, it will create a free trade area for over 1.7 billion people with an estimated Gross Domestic Product of about $2.3 trillion. The signing of this pact, confined to trade in goods, will be followed by talks for an ASEAN-India accord on a “liberalised” flow of services and investments in either direction. These parleys are planned for conclusion by the end of 2009.

The FTA was finalised by the two sides at a meeting of their Economic Ministers in Singapore in late-August. However, two ASEAN members are understood to have sought to reopen the entire bargain, by calling for “reciprocity” between the 10-nation economic bloc and India over their “negative lists.”

This sub-category in the draft trade pact specifies products with no tariff sops; and the issue has now been sorted out, the baseline being an acknowledgment that there could be “no reciprocity” between the two sides with “no symmetry.”

ASEAN leaders trace this asymmetry to the fact that the economies of India and their own trading bloc “are not complementary.”

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