India, Asean to sign August pact for Free Trade Area

India and the South-East Asian nations are set to create a Free Trade Area (FTA) of 1.8 billion people, with a combined Gross Domestic Product (GDP) of $3.8 trillion, in August with the signing of the much-awaited agreements in services and investment.

Malaysia’s Minister for International Trade and Industry Mustapa Mohamed said the agreements between India and the Association of South East Asian Nations (Asean) on trade in services and investment might be signed in Brunei Darussalam in August.
Economic Ministers of the Asean nations will meet in Brunei between August 20 and 24. They will also have meetings with the 10-nation bloc’s external partners, including India.

“The agreements are almost ready and are going through legal scrubbing now. We hope to get the agreements signed during the India-Asean Economic Ministers’ meet in August,” Mohamed told a group of Indian journalists at his office in Kuala Lumpur.
Malaysia has been leading the negotiations with India on behalf of Asean for the agreements.

India and Asean signed the Trade in Goods Agreement on August 13, 2009, and the deal came into effect with all 10 countries of the bloc by the middle of 2011. If the agreements on trade and services between India and Asean are signed, they will create a Free Trade Area with a combined GDP of $3.8 trillion.

Sources told Deccan Herald that if the assessment of the legal sustainability and implications of the agreements could not be completed before the Economic Ministers’ meet in August, then the signing might take place on October 9 or 10, when Prime Minister Manmohan Singh would travel to Brunei to meet the leaders of the South-East Asian nations for the annual India-Asean summit.

India-Asean trade volume grew 37 per cent to reach $79 billion last year. Officials of the Indian Government and Asean nations said the trade target of $100 billion was not too far away to achieve.

Mohamed said the agreements on trade in services and investments would help boost greater trade and economic ties between India and the Asean.

The negotiations between India and Asean on trade in services and investments agreements hit several roadblocks, particularly on the issue of definition of investment. While the Asean nations wanted the definition to include intellectual property, New Delhi was not ready for it. Besides, India also expected the Asean to be more accommodative on the issue of movement of “natural persons” in the pact on trade in services.

The negotiations, however, concluded just hours before Prime Minister Manmohan Singh met the leaders of the South-East Asian nations for a special commemorative summit in New Delhi on December 20 last year.

Mohamed told journalists in Kuala Lumpur that the negotiations could be concluded as both India and Asean had shown flexibility on contentious issues.

Officials of the Malaysian Government had visited New Delhi a few weeks ago to meet their counterparts in the Ministry of Commerce and Industries in India to discuss about the legal vetting of the proposed agreements. A delegation of Indian officials also visited Kuala Lumpur to meet their counterparts in Malaysian Government.