Indian-ASEAN bilateral trade target set

Shri Anand Sharma, Union Minister of Commerce & Industry, today signed the ASEAN-India Free Trade Agreement in Goods following the meeting of the ASEAN-India Economic Ministers, held in Bangkok. The meeting was hosted by Thailand, the current Chair of the 10-member Association of Southeast Asian Nations (ASEAN) grouping that completed four decades of its existence in 2007. As part of the Comprehensive Economic Cooperation Agreement, the Trade in Goods Agreement will integrate the two globally important economic blocks for mutually beneficial economic gains. ASEAN is a major trading partner for India and accounts for about 10% of its global trade. In the last financial year, bilateral trade between India and ASEAN was more than US $ 40 billion. India and ASEAN have set an ambitious target of achieving bilateral trade of US $ 50 billion by 2010. The current Agreement which comes into force from 1st January 2010 would help achieve this target.
The Trade in Goods agreement focuses on tariff liberalization on mutually agreed tariff lines from both the sides and is targeted to eliminate tariffs on 80% of the tariff lines accounting for 75% of the trade in a gradual manner starting from 1st January, 2010. The Agreement has provided flexibilities to India and ASEAN countries to exclude some of the products from the tariff concessions or eliminations to address their respective domestic sensitivity. India on its part has excluded 489 items from the list of tariff concessions and 590 items from the list of tariff elimination to address sensitivities in agriculture, textiles, auto, chemicals, crude and refined palm oil, coffee, tea, pepper etc. ASEAN countries have also maintained similar exclusion list from the proposed tariff concessions or eliminations.
The exchange of tariff concessions between India and the ASEAN Member Countries would lead to growth in bilateral trade and investment resulting in economic benefits to India and the ASEAN Member Countries. Indian exporters of Machinery and machine parts, Steel and steel products, agriculture products such as Oilcake, Wheat and Buffalo Meat, Auto Components, Chemicals and Synthetic Textiles would gain additional market access as a result of tariff liberalisation by ASEAN. Indian manufacturers would also be able to source products at competitive prices from the ASEAN countries.
The Agreement also provides for bilateral safeguard mechanisms to address sudden surge in imports after the Agreement comes into force. In such an eventuality if it hurts a domestic industry, safeguard measures including imposition of safeguard duties may be put in place for a period up to 4 years. The flexibility to invoke the safeguard measures will remain available for both the sides for a period of 7 years to 15 years from the date, the Agreement comes into force. The signing of the Agreement signals India’s firm commitment to its ‘Look East’ policy of building upon its historical links with the countries of the Southeast Asian region and further deepening and widening this partnership.
Earlier, during the day, Mr. Anand Sharma called on the Prime Minister of Thailand Mr. Abhisit Vejjajiva. He also held discussions with the Minister of Commerce, Ms. Porntiva Nakasai and the Minister of Industry, Mr. Charnchai Chairungrueng in separate meetings. The meetings focused on ways to further strengthen bilateral trade and investment linkages. He invited Ms. Porntiva Nakasai to attend the Informal Ministerial Meeting on the Doha Round of WTO to be held in New Delhi on September 3-4, 2009.
Shri Anand Sharma also held substantive bilateral discussions with his counterpart Indonesian trade minister Mari Pangetsu. He invited her to attend the forthcoming WTO ministerial meeting to be held in New Delhi on 3-4 September. He also met the Singapore Trade Minister Lim Hng Kiang and the two ministers discussed a range of bilateral economic relations.
India-ASEAN trade was around US$ 40 billion during 2007-08 making ASEAN the 4th largest trading partner of India (after EU, US and China). The India-ASEAN trade has grown rapidly in recent years (27% CAGR since 2000). The signing of the India-ASEAN Free Trade Agreement will give a further impetus to the trade and investment linkages between India and ASEAN. India and ASEAN are currently negotiating Agreements on Trade in Services and Investment, which are to be concluded by December 2009. India looks forward to access the vast services market of ASEAN. India’s total trade in services was US $ 137.50 billion in 2006. The corresponding figure for ASEAN is US$ 280.90 billion. Similarly, Foreign Direct Investment (FDI) attracted by India in 2007-08 was US $ 24.60 billion whereas ASEAN member countries attracted FDI totaling US $ 60.50 billion in the year 2007.