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Modernisation ofIndia-ASEAN FTA

  • Category
    International Relations
  • Published
    31st Dec, 2023

Context

India and the 10-member ASEAN nationsis going to conduct 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 visitNew Delhi to begin the negotiations.

About

  • Background:
    • 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.
  • Security: ASEAN and India are working towards establishing rules-based security architecture in the region, which contrasts China’s aggressive policies.
    • They also collaborate to counter terrorism, violent extremism, and transnational crimes.
  • Cultural connections: India shares deep cultural and historical connections with ASEAN countries.
    • The spread of Hinduism and Buddhism to Southeast Asia from India and the influence of Indian languages on the region’s scripts are some examples of the cultural connection between the two regions.

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