The Hindu Business Line : Favourable Easterlies

THERE ARE TWO ways of seeing the partnership accord signed between India and the Association of South-East Asian Nations in Vientiane on Tuesday. The first is of course the importance of the accord to India in terms of cooperation in sectors as diverse as trade, tourism, culture, sports and people-to-people contact. The partnership will also cover joint measures to combat terrorism, drug-trafficking, arms-smuggling, money-laundering, human-trafficking and sea-piracy. The four-page partnership accord and the nine-page action plan also envisage cooperation in multilateral forums such as the World Trade Organisation and in addressing common challenges of food, human and energy security.

The formalisation of cooperation in these fields through a partnership accord has more than a symbolic value. Of real significance are the concrete measures planned to facilitate easier commercial ties between the two economic units in the shape of a free trade arrangement work on which was initiated much before the Laos summit. Available reports do not indicate that free-trade issues were brought up at the discussions, but this is perhaps to be expected given the basic symbolic thrust of the summit as far as India-Asean relations are concerned. Yet, an FTA is quite indispensable if the enhanced two-way trade target of $30 billion by 2007 (against $13 billion now) is to be attained on schedule, as was clearly hinted at by the Foreign Minister, Mr Natwar Singh.

According to the framework agreement on comprehensive economic cooperation signed by the two sides last year, negotiations on a free trade arrangement in goods are to be finalised by June 30, 2005. Talks on services and investments are scheduled to begin in 2005 and be completed by 2007. On the exchange of tariff concessions on the "early harvest scheme" broadly agreed to between Asean and India, the negotiations were to start in early November, but now there are doubts if the scheme will become operational on January 1, as agreed on earlier. Clearly, the main area of concern for New Delhi should be the expeditious handling of the nuts and bolts of the emerging FTA because, among other things, time is not on India's side considering the keenness of China, Japan, and Korea to engage in closer economic relations with Asean.

The second way to see the India-Asean partnership accord is to put it into a larger perspective and view it as part of a slew of similar agreements signed in Vientiane, led by China which has agreed to begin cutting tariffs on $100 billion worth of goods, paving the way for an Asean-China free-trade zone covering nearly a third of the world's six billion people. Then followed the agreements between Asean and Japan, Australia, New Zealand and South Korea to commence negotiations next April to set up similar free-trade zones. Clearly, the Asian region is set to become the hotspot of economic competition in the next few years, and Indian industry will have to give of its best to carve out a market for itself in this area and, at the same time, stave off powerful competition in the domestic market from Asian products. Going by the recent performance of the Indian economy, this is well within its ability.

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