India's 'flexible' approach at ASEAN<\/p>\n
Siddharth Srivastava, New Delhi<\/p>\n
The Southeast Asian Nations (ASEAN) summit in Kuala Lumpur
\nlast week, which was followed by the first East Asia summit,
\nhad made it apparent that the heat is on India to push through
\neconomic changes and reforms that are crucial for further
\nsynergies.<\/p>\n
The message from the other countries is quite clear: that
\nIndia is a powerhouse in biotechnology, pharmaceuticals and
\ninformation technology (IT), but more needs to be done to ramp up
\ninfrastructure such as airports, roads and power, introducing
\ntrade reforms and inviting foreign direct investment in areas
\nsuch as retail.<\/p>\n
India's proposed free trade agreement (FTA) with ASEAN has run
\ninto rough weather with three nations, Singapore, Thailand and
\nMalaysia, raising the issue of the 1,414-item negative list
\nproposed by India.<\/p>\n
A statement by its chairman, Malaysian Prime Minister Abdullah
\nBadawi that was released to the press has emphasized the issue:
\n\"ASEAN is concerned on the proposal by India to exclude a
\nsubstantial portion of trade from the FTA through exclusion of a
\nlarge number of products from tariff concessions.\"<\/p>\n
Badawi urged India to \"positively consider the ASEAN's
\nposition\" and stressed on the changing face of Asia: \"the
\nemergence of China and India as powerhouses, coupled with
\ndemographic changes in Japan, would almost certainly lead to a
\nre-alignment of power arrangements.\"<\/p>\n
ASEAN last year agreed to implement tariff reductions to form
\na unified market by 2012 and is pursuing free trade pacts with
\ncountries including India, China, Japan and Australia to expand
\nmarkets for its goods. Tariffs within ASEAN are mostly in the
\nrange of zero to 5 percent, with a few exceptions, while India's
\npeak tariff rate is 15 percent.<\/p>\n
Prime Minister Manmohan Singh, whose economic reform plans
\nhave been repeatedly stymied by crucial coalition partners, the
\nleft parties, has been trying to put a brave front to the barrage
\nof tough questions. Manmohan fielded tricky questions at the
\nASEAN business advisory council where he declared: \"I would be
\nthe last to deny that everything you see in India is rosy. Old
\nmindsets do persist. The liberalization process is also a
\nstruggle for the minds of our people, and I do believe we are
\nsucceeding.\"<\/p>\n
The window of reforms in India's retail sector is not shut,
\naffirmed Manmohan. \"There are problems in opening up retail to
\nforeign direct investment. We do recognize immense opportunities.
\nI hope we can come up with a positive outcome in the next five to
\nsix months,\" said Singh, who again faces domestic opprobrium on
\nthe issue from left allies worried about millions of mom and pop
\nshops being forced out of business by the likes of Wal-Mart.<\/p>\n
Nobody, however, questions India's might or commitment towards
\nIT, with India's dominance in the sector accepted by every
\ncountry. Manmohan has proposed an India-ASEAN Technology Summit
\nin 2006. India will assist some of ASEAN's lesser-developed
\nnations in learning English, the basis of the outsourcing
\nindustry, in which India remains the pioneer.<\/p>\n
Manmohan has proposed setting up centers for English language
\ntraining in Cambodia, Laos, Myanmar and Vietnam \"to equip
\nstudents, civil servants, professionals and businessmen with
\nadequate English language and communication skills.\"<\/p>\n
Indeed, India has realized that there is a lot at stake for
\nIndia, despite Manmohan's domestic political compulsions. East
\nAsia accounts for one-third of India's trade, making the region a
\nmore important trading partner than the EU or the U.S. There has
\nbeen a rapid change in trade with China, which is India's second-
\nlargest trading partner. Indo-ASEAN trade at US$25 billion is
\ngrowing at 30 percent per annum. ASEAN has a combined gross
\ndomestic product of $800 billion and a population of 558 million.<\/p>\n
ASEAN comprises the 10 countries Indonesia, the Philippines,
\nMalaysia, Thailand, Myanmar, Singapore, Laos, Vietnam, Cambodia
\nand Brunei. Japan, China and South Korea called the \"three plus\"
\nalong with India, Australia and New Zealand are involved that
\nforms the basis of expansion of ASEAN region into an east Asian
\nunion.<\/p>\n
According to a comment in the Indian Express: \"even if an
\nEast-Asian super state seems an impossibility, the future
\ncreation of a free trade zone with all 16 participants is a
\ndistinct target. The movement towards that goal has
\nalready begun. China has become Japan's largest trading partner,
\nand a FTA between ASEAN and Beijing will be working by 2020. With
\nmost negotiations sorted out, the Indo-ASEAN-FTA will kick off in
\n2007 and will be fully operational by 2016. Australia and New
\nZealand will also link with ASEAN.\"<\/p>\n
There is recognition among ASEAN countries about the fruits of
\nexchange with growing Asian powerhouses, India and China.<\/p>\n
India understands that its \"Look East policy,\" for which
\npolitical foundations were actually laid half a century ago, took
\noff far too late considering the tremendous economic development
\nthat has taken place in this part of the world. The ASEAN,
\nestablished in 1967, has expanded and deepened its activities
\nmore effectively than any other regional association, except for
\nthe European Union. As the first EAS signifies, the relationship
\ngoes beyond ASEAN.<\/p>\n
The heart of India-ASEAN relations is the economic one.
\nIndia's \"Look East\" policy was launched around 1991. In the mid-
\n1960s when full membership was offered to India in a yet-to-be-
\nestablished ASEAN was turned down (with a senior Indian Minister
\nfamously remarking that the country did not want to join \"Coca
\nCola countries\" in some regional experiment).<\/p>\n
Thus, the country became a sectoral dialog partner of ASEAN in
\n1992, a full dialog partner in 1995, and a member of the ASEAN
\nregional forum (ARF) in 1996. After intensive efforts to achieve
\nparity with China, Japan, and South Korea in the ASEAN scheme of
\npartnerships, India became a summit level partner only in 2002.<\/p>\n
By adopting the \"flexible\" approach at Kuala Lumpur, Manmohan
\nhas tried hard not to repeat the mistakes of the past.<\/p>\n
The writer is a New Delhi-based journalist. He can be reached
\nat srivastava_siddharth@hotmail.com.<\/p>",
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