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JP/ASEAN, India to ink FTA soon, boost trade by 30%
After a string of protracted negotiations since 2003, ASEAN is to sign a free trade agreement (FTA) with India during its next month’s summit.
With a combined market of 1.72 billion people, the deal will form the world’s second largest FTA after the ASEAN (Association of Southeast Asian Nations) and China FTA in 2007.
ASEAN secretary general Surin Pitsuwan told The Jakarta Post during a recent trade meeting the FTA would be signed during the group’s summit from Feb. 27 until March 1 at Hua Hin beach resort, around 130 kilometers south-west of Bangkok, Thailand.
“It (the FTA) has been completed to the satisfaction of both sides. We are only waiting for the day that we sign our respective signature on the document,” said Pitsuwan on the sideline of the Delhi Dialogue, held recently in New Delhi, India.
The dialogue discussed future potential ASEAN-India cooperation in business and security.
Pitsuwan believed the deal would boost merchandise trade volume between the two regions by more than 30 percent this year.
“We are hoping that by 2010, two-way trade volume would reach US$50 billion. I think the new flexibility from both sides would certainly encourage us to grow very very fast in our mutual cooperation,” he said.
The trade volume between the two regions was estimated to reach more than US$40 billion in 2008, up from US$37 billion in 2007, according to Pitsuwan. ASEAN has been enjoying a trade surplus against India. In 2007, ASEAN exports to India reached US$24.66 billion, while only importing US$12.42 billion.
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Pitsuwan is upbeat no ASEAN member countries would be left out from the benefit of the FTA.
“We export more to India than India to us,” he said.
Pitsuwan said ASEAN and India would immediately commence negotiations on trade in services and investment flows.
ASEAN and India concluded the FTA negotiations in August, 2008, under which Indian tariffs will reduce to zero on 3,666 items imported from ASEAN by the end of 2012.
The items include fans, air-conditioner parts, refrigerators, jewellery and ornamental goods, rubber products and plastic resins.
However, this FTA would not apply to all goods. For example, about 600 Indian agricultural products will be exempted from the FTA.
Indian businessmen said the deal would help ASEAN countries and India to mitigate the negative impacts of the deepening global economic slump.
Rajeev Chandrasekhar, the president of the Federation of Indian Chambers of Commerce and Industry (FICCI), said the positive impact of the FTA might not be seen immediately due to the crisis.
“We need to see how long the economic slowdown will play out.”
“The agreement will strengthen the market, exports and investment flows, in a sense you create an island which has lesser dependence on the volatility in the West,” said Chandrasekhar.
Krishan Kumar Modi, Chairman of Modi Enterprises, one of the India’s largest agrochemical commodity producers, said his company could boost sales to ASEAN by up to 400 percent .
Indonesia-India relations
1. Indonesia’s population is 230 million while that of India is 1.147 billion.
2. Bilateral trade topped US$6.55 billion in 2007, leaping from $4.79 billion in 2006. In 2010, trade is forecast to reach $10 billion. Balance of trade is heavily in favor of Indonesia.
3. Indonesia mainly exports palm oil, coal, copper ore, alcohols, phenols, rubber, fruit and nuts to India and imports hydrocarbons, animal feed, flat rolled steel products, alloy steel, sugar molasses, cotton, aluminium and telecommunications equipment.