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India-ASEAN FTA talks for 'modern' pact

  • Published
    26th Dec, 2023

India and the 10-member ASEAN nations is going to start a review meeting of the existing free trade agreement (FTA) and discuss ways to make the pact more ‘modern’ and address needs of present times.

  • A delegation comprising key officials from ASEAN nations will visit New Delhi to begin the negotiations.
  • The Free Trade agreement was signed in August 2009 and enforced from 2010.
  • Now the new areas such as labour, environment, SMEs and gender are likely to be kept out in the pact for modernisation.
  • The first round of negotiations for reviewing the FTA, officially known as the ASEAN India Trade in Goods Agreement (AITGA), will be on February 18-19 in New Delhi.

Highlights of the modernising ASEAN-India Trade in Goods Agreement (AITGA):

  • ROO Modification for Market Access:
    • Modernizing the ASEAN-India Trade in Goods Agreement (AITGA) involves changes in Rules of Origin (ROO).
    • Introduction of Preferential Specific Rules (PSRs) in the ROO chapter aims to relax rules for select items, boosting India's exports.
    • PSRs can also prevent potential re-routing of Chinese goods through ASEAN nations, strengthening India's market position.
  • Chapter on Trade Remedies:
    • The revamped AITGA will include a dedicated chapter on trade remedies.
    • This chapter aims to safeguard domestic industries by providing mechanisms to counteract unfair trading practices or unexpected surges in imported goods.
    • Trade remedies act as a safety net, ensuring protection for domestic industries against adverse impacts of global trade dynamics.
  • Exclusion of New Areas to Ensure Focus:
    • The modernization effort will not introduce new areas like environment, labour, MSMEs, or gender into the AITGA.
    • The decision is driven by the goal of avoiding complexity and maintaining the pact's focus on enhancing efficiency.
    • Prioritizing the improvement of existing provisions reflects a strategic approach to streamline the free trade agreement without introducing additional complexities.
  • Efficiency Enhancement as Primary Goal:
    • The overarching objective of AITGA revamping is to enhance the efficiency of the existing trade pact.
    • Instead of expanding into new areas, the focus is on refining and optimizing the current framework for a more effective trade relationship between ASEAN nations and India.
    • This strategic approach aligns with the goal of ensuring the AITGA remains a streamlined and impactful instrument for fostering economic cooperation.

    Significance of Trade with ASEAN:

    • The ten-member ASEAN, which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia, accounted for 3 per cent of India’s global trade in 2022-23.
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