The Hindu Business Line : India calls for new Asian Integration Adjustment Facility

“The ADB could play a crucial role in the design and implementation of such adjustment assistance programmes in member countries.” – Mr Jairam Ramesh

Our Bureau

New Delhi, Nov. 24 India today floated the creation of an Asian Integration Adjustment Assistance Facility in order to help overcome competitive threats from free trade agreements and other regional integration initiatives entailed in such outright liberalisation of trade.

Speaking on a special lecture at the Asian Development Bank (ADB) in Manila on the theme of ‘India’s Economic Integration with Asia’, the Minister of State for Commerce and Power, Mr Jairam Ramesh, said the ADB could play a crucial role “in the design and implementation of such adjustment assistance programmes in member countries”.

Stating that economic integration, especially FTAs, necessarily involve “trade-offs and compromises,” Mr Ramesh said there were macro gains to be had but there were also micro pains that could be inflicted. “These costs would be borne by specific industries, specific livelihoods and specific regions,” he said adding that is why adjustment assistance would become critical to sustain the political acceptability of FTAs and broader economic integration as well.

Citing the case of the how the proposed India-Asean FTA would make Indian tea, coffee and pepper uncompetitive from Vietnam particularly as duties get progressively reduced by 2018 to 45 per cent in coffee and tea and to 50 per cent for pepper, Mr Ramesh said advance action to enhance productivity in these sectors would need to be taken.

New opportunities

Mr Ramesh said the current global economic crisis presents new opportunities for Asia. He said that he had commissioned a Delhi-based think tank RIS, after a discussion with the ESCAP Secretary-General, to work with counterpart institutions in other Asian countries to prepare a detailed blueprint for an Asian Infrastructure Bank or an Asian Infrastructure Finance Corporation with focus on financing cross-border infrastructure.

That report was released last year and was discussed subsequently, he said adding that one option mooted was for the new financing institution to be an ADB-affiliate akin to the IFC vis-À-vis the World Bank. He said the current situation makes the time ripe for such a bold initiative.

Mr Ramesh also underlined the need for creating a union of account for Asia, viz., namely Asian currency unit for facilitating intra-regional trade by moderating the exchange rate volatility between region’s currencies. “This bolder approach should cover all East Asia Summit countries before eventually being extended to cover other Asian countries to make it truly a regional lender of last resort.”

Mr Ramesh also traced the genesis and growth of SAARC, Bimstec and Asean, the last of which with India is to forge an FTA next month and said how all these initiatives helped intensify cooperation in the region for the mutual benefits of participating countries.

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