Indian Prime Minister Dr Manmohan Singh and his delegation held talks with the member-countries of the Association of East Asian Nations (ASEAN) to further liberalise trade in goods, services and investment at the Summit held in Phnom Penh last month.
Two competing visions of regional economic integration animated conversation at the ASEAN and East Asia summits which took place amid a faltering world economy, regional tension and great power manoeuvrings.
ASEAN leaders have pledged to create ‘Regional Comprehensive Economic Partnership’ (RCEP) with their 10-member nations and six partner countries including China, India, Japan, South Korea, Australia and New Zealand.
Strategic Partnerships
It aims to lower trade barriers across the region to create the biggest free-trade market on the globe and a production base that would ensure the free movement of goods, services, investments and skilled labour in the region by 2015.
China, which has just emerged from once-in-a-decade leadership transition, is a strong votary of the RCEP to offset the US-led Trans-Pacific Partnership (TPP) that excludes Beijing.
US President Barack Obama advocates the TPP as a part of his administration’s ‘rebalancing strategy’ towards Asia.
The TPP also aims to bring down trade barriers between the US and a group of Asian countries and venture into new areas of cooperation.
“We are organising trade relations with countries other than China so that China starts feeling more pressure about meeting basic international standards,” Mr Obama said during a presidential debates with Mitt Romney in October.
Looking East
The Trade and Economic Relations Committee (TERC) headed by Dr Singh decided to join the ASEAN plus Six talks, keeping in view its 20-year-old ‘Look East’ policy and the deadlocked Doha Round.
Sources said that the Indian Government is concerned about the possible impact of the RCEP on certain products, but decided to reinforce India’s determination to be a ‘constructive’ partner in the negotiations that are expected to remove the kinks in the architecture of economic partnership.
RCEP has grown out of a plan to launch trilateral trade talks among China, Japan and South Korea and billed to be worth $17 trillion ($20.72 trillion).
Closing gaps
India and ASEAN have a Free Trade Agreement in goods and are negotiating to include services and investment to reach a Comprehensive Economic Cooperation Agreement (CECA).
India-ASEAN trade currently stands at US $79 billion ($96.29 billion), surpassing the US$70 billion ($85.32 billion) target set for 2012.
There is however still a fair degree of scepticism about the success of the talks as protection for sensitive goods and geopolitical sensitivities could disrupt the negotiations.
Experts say countries might ask for special treatment for their agricultural produce. For example, talks between Seoul and Tokyo have been on hold since 2004 over Japan’s reluctance to lower tariffs on agricultural goods.
Stalled talks
ASEAN Deputy Secretary General Lim Hong Hin told a business forum in Makati City in the Philippines that 28% of ASEAN Economic Community measures due to be implemented during 2008-2011 were pending.
Experts point to poor infrastructure, lack of human resources, good governance and low participation from the private sector as the possible main hurdles in achieving the establishment of a single market.
There are also concerns that the South China Sea territorial disputes between China and Vietnam and the Philippines over the Spratly and Parcel islands may muddy the negotiations and delay the launch of the pact.
