India, Asean must move beyond free trade in goods: Delhi Dialogue

February 14th, 2012 - 6:25 pm ICT by IANS  

New Delhi, Feb 14 (IANS) With China making major inroads into Southeast Asia, India was Tuesday asked to take forward its relations with the region beyond the free trade agreement in goods to other spheres like media and entertainment, tourism and technology services.

Singapore-based Institute of Southeast Asian Studies director K. Kesavapany made the pitch here at the Delhi Dialogue-IV, a key engagement between India and Association of South East Asian Nations (Asean) organised by the Indian Council of World Affairs (ICWA) and the Federation of Indian Chambers of Commerce and Industry (FICCI).

India and the Asean have a Free Trade Agreement (FTA) in goods in place and are working towards concluding another on services and investments, apart from looking at a comprehensive economic cooperation agreement (CECA) for the future.

“An Asean-India FTA will help India to forge ties with Asean in order to ensure its support as a crucial ally in the East Asia Summit. This is very important in the light of China’s rising influence through trade, aid and investment in the region,” Kesavapany propounded at a session on economic relations chaired by former Indian ambassador A.N. Ram.

“Currently, India’s share in Asean imports is approximately two per cent against 13 per cent for China’s. India needs the FTA with Asean as an instrument to encourage the maintenance of its share. If this happens, the FTA is expected to improve India’s trading position in the region,” he said.

He blamed the preferential tariffs enjoyed by Asean members among themselves that have contributed to the deteriorating competitiveness of Indian exports to the region.

“If economic integration is successful beyond free trade in goods, both India and Asean stand to gain tremendously. There are many opportunities in the areas of media and entertainment, tourism and technology services,” he said.

He noted that India possessed a distinct advantage over China’s largely manufacture-oriented human resources, considering that Indian manpower is technically and professionally competitive.

Trade between India and Asean has grown sharply since 2002. In 2010, the total trade was $55.4 billion, a 42 per cent increase from 2009, and this accounted for 2.7 per cent of total Asean trade. The foreign direct investment from India into Asean was $2.6 billion, an increase of 221 per cent since 2009, accounting for 3.4 per cent of total FDI into the region that year.

Comparing India-Asean FTA with the region’s Trans-Pacific Partnership (TPP), Kesavapany said both arrangements were “stepping stones” toward freer trade, though there were challenges such as environment and labour issues being negotiated under the Doha round.

Tracing Asean’s economic evolution, Cambodian government advisor Dr. Sok Siphana said the region had made much progress toward full integration, and building of an economic community by 2015, bringing with it the prospects for free circulation of goods, services, capital and skilled labour.

“I believe that a lot more is yet to be done. Not only do we have to do more, but we have to do it faster. For example, we have to accelerate the pace of implementation of the numerous measures identified in the Asean Economic Community blueprint such as the single window and trade facilitation,” he noted.

He also suggested that the intra-regional trade share should be at least 40 per cent compared to 25 per cent at present in the 10 Asean members’ total internal trade.

The World Bank Group’s South Asia Vice President Isabel Guerrero noted that South Asia cannot take its true place in the Asian century without greater integration within the region. She said faster progress is needed to reduce trade barriers and build trust across the neighbourhood.

“A more integrated South Asia is also an opportunity for the Asean,” she added.

Singapore-based SAEA Group Research Chairman R. Ravindran called upon the Indian private sector to take more interest in infrastructure projects in Asean, and pointed out that Asean nations prefer Indian firms and would welcome them.

He also listed power, IT, culture industry such as film and television, railway, and education as sectors that provided tremendous scope.

The small and medium enterprises, he noted, had huge potential in India-Asean trade ties but had been left neglected for long.

“Instead of competition, we have to have cooperation between India and Asean,” he added.

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