Trade remains sore point between India, ASEAN

Nayanima Basu New Delhi | Updated on January 27, 2018 Published on January 24, 2018
Soldiers carry the flags of ASEAN nations as they march past during full dress rehearsal for the 69th Republic Day Parade at Rajpath in New Delhi, on Tuesday. Photo: PTI Photo

Indonesia, Cambodia yet to ratify pact on services and investment signed in 2014

While all 10 leaders from the Association of South-East Nations (ASEAN) have gathered in India to celebrate India’s 68th Republic Day, two-way trade continues to remain a pain-point in the ties even as both sides look at strengthening strategic ties.

India and ASEAN signed the trade pact on services and investment in September 2014. However, out of the 10 member countries, two are yet to ratify the treaty – Indonesia and Cambodia. In the case of Indonesia, it believes that if it signs the agreement, then Indian professionals will flood their markets, in other words, take their jobs away, sources told BusinessLine.

India had been urging ASEAN countries – Singapore, Thailand, Malaysia, Cambodia, Myanmar, Brunei, Laos, the Philippines, Indonesia and Vietnam – to ratify and implement the services pact at the earliest as it continues to get impacted by the free trade agreement (FTA) in goods, sources said. India and ASEAN had signed the goods FTA in 2009 and it was implemented in 2010. However, under the pact while imports from ASEAN countries have seen a rise, exports from India to that region have not seen a significant jump.

During his bilateral meeting on Thursday with Indonesian President Joko Widodo, Prime Minister Narendra Modi is expected to raise this issue. On the other hand, Cambodia is not ratifying it because of its internal legislative issues, said another official, involved in the talks.

“Indonesia has always been wary of India flooding their jobs market. And this is unlikely to change if one goes by their posturing in RCEP, which is in limbo. The traditional market access issues with ASEAN remains. They will continue to put India in tenterhooks unless India agrees to be flexible in RCEP,” said Biswajit Dhar, Economics Professor, Jawaharlal Nehru University. All the 10 ASEAN countries are also part of the China-led proposed mega trade pact – Regional Comprehensive Economic Partnership (RCEP) – which also includes India, Japan, South Korea, Australia and New Zealand.

However, India is now looking at ASEAN more from the strategic perspective in terms of maritime security rather than enhancing trade. This is crucial to counter China as ASEAN seeks greater participation from India even as they face Beijing’s expansionist policy in South China Sea. “The ratification will happen soon. However, the government is now more focussed on maritime cooperation and security, especially in the backdrop of India becoming a rising power in maritime links and rise of the Indo-Pacific region,” said Prabir De, Professor, Research and Information System for Developing Countries (RIS), and Coordinator, ASEAN-India Centre (AIC), India.

This is for the first time that all 10 leaders of the ASEAN region have participated in the Republic Day celebrations as chief guests.

Published on January 24, 2018

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