About two billion people from 11 countries, with a combined GDP of $2.4 trillion, will come under a free trade regime by the year-end. After six years of negotiations,India and the ten-member Association of South East Asian Nations (Asean) successfully wrapped up talks for the landmark free trade agreement in goods.The agreement,when signed in December,will be second only to a similar free trade pact China has with Asean. A joint media statement by India and Asean, said:
"Both the sides were able to reach an agreement on the modality for tariff reduction and/or elimination, which is among the key elements that will facilitate the creation of an open market in the region."Total Asean-India trade is around $38billion and is likely to grow to $50 billion by 2010.On Thursday, Asean also sealed a comprehensive free trade agreement with Australia and New Zealand with an aim to boost the $48-billion yearly trade between them.Along with India and China, there is now a free trade umbrella over the other ten fastest growing economies of the world that form Asean. These are Indonesia, Malaysia, Singapore, Thailand, Vietnam, Brunei, the Philippines, Cambodia, Laos and Myanmar. For India, which had made FTAs a major part of its economic diplomacy, this agreement is the most significant one.
For Indian consumers, the agreement will bring cheap imports like plastics, electrical machinery, leather and rubber products from Asean. For industry, sourcing chemicals, including pesticides, and major raw materials like coal and petrochemicals would be far cheaper. At the same time, each country involved in the agreement would be able to protect around 500 items each from tariff cuts. India has chosen to keep mostly sensitive agriculture items in this negative list. In the talks there were acute differences on duty cuts on items like palm oil, coffee, pepper and tea.
The trade agreement will also enable India to be a part of the Asian trade integration, with Asean having trade pacts with China and Japan and South Korea. India's Comprehensive Economic Cooperation Agreement with Singapore will continue separately, with its emphasis on the services sector.
India has a partial FTA covering 82 items with Thailand and is in discussions with Malaysia and Indonesia for trade pacts. Terming the conclusion of the talks as a "key regional milestone", commerce and industry minister Kamal Nath, who represented India, said, "The countries of East Asia are important drivers of growth, with large consumption to drive global economies." Currently, India is Asean's seventh largest trading partner. Pointing out that India's trade with Asean is 9.6% of the country's total trade, Nath, however, said Asean's trade with India is just 2% of the trading bloc's global trade. "So the potential for enhanced economic engagement between Asean and India is profound".The formal inking of the AIFTA and the Asean-India Agreement on Dispute Settlement Mechanism would take place during the India-Asean summit in Bangkok in December and the implementation of tariff reduction commitments would start from January 1, 2009. Trade experts and industry bodies like CII and Ficci welcomed the conclusion of India-AseanFTA negotiations in goods trade. Ficci urges for an early start of negotiations in services and investment so that we could reap the full benefits of a comprehensive economic cooperation agreement.
"Both the sides were able to reach an agreement on the modality for tariff reduction and/or elimination, which is among the key elements that will facilitate the creation of an open market in the region."Total Asean-India trade is around $38billion and is likely to grow to $50 billion by 2010.On Thursday, Asean also sealed a comprehensive free trade agreement with Australia and New Zealand with an aim to boost the $48-billion yearly trade between them.Along with India and China, there is now a free trade umbrella over the other ten fastest growing economies of the world that form Asean. These are Indonesia, Malaysia, Singapore, Thailand, Vietnam, Brunei, the Philippines, Cambodia, Laos and Myanmar. For India, which had made FTAs a major part of its economic diplomacy, this agreement is the most significant one.
For Indian consumers, the agreement will bring cheap imports like plastics, electrical machinery, leather and rubber products from Asean. For industry, sourcing chemicals, including pesticides, and major raw materials like coal and petrochemicals would be far cheaper. At the same time, each country involved in the agreement would be able to protect around 500 items each from tariff cuts. India has chosen to keep mostly sensitive agriculture items in this negative list. In the talks there were acute differences on duty cuts on items like palm oil, coffee, pepper and tea.
The trade agreement will also enable India to be a part of the Asian trade integration, with Asean having trade pacts with China and Japan and South Korea. India's Comprehensive Economic Cooperation Agreement with Singapore will continue separately, with its emphasis on the services sector.
India has a partial FTA covering 82 items with Thailand and is in discussions with Malaysia and Indonesia for trade pacts. Terming the conclusion of the talks as a "key regional milestone", commerce and industry minister Kamal Nath, who represented India, said, "The countries of East Asia are important drivers of growth, with large consumption to drive global economies." Currently, India is Asean's seventh largest trading partner. Pointing out that India's trade with Asean is 9.6% of the country's total trade, Nath, however, said Asean's trade with India is just 2% of the trading bloc's global trade. "So the potential for enhanced economic engagement between Asean and India is profound".The formal inking of the AIFTA and the Asean-India Agreement on Dispute Settlement Mechanism would take place during the India-Asean summit in Bangkok in December and the implementation of tariff reduction commitments would start from January 1, 2009. Trade experts and industry bodies like CII and Ficci welcomed the conclusion of India-AseanFTA negotiations in goods trade. Ficci urges for an early start of negotiations in services and investment so that we could reap the full benefits of a comprehensive economic cooperation agreement.
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