WTO Ministerial Section • Volume 12 • Number 32 • 2nd October 2008

ASEAN, India to Sign Trade Deal in December, Minister Says

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India is set to sign a free trade agreement, or FTA, with the Association of South East Asian Nations (ASEAN) in mid December, an Indian Minister confirmed on 29 September.

“We will formally be signing the FTA with ASEAN around December 18,” the Minister of State for Commerce, Jairam Ramesh, said at a seminar on the India-ASEAN free trade deal, reported the Economic Times. It is expected that the agreement will be signed between India and ASEAN’s 10 member nations at the India-ASEAN Summit in Bangkok.

Ramesh said India had shown “remarkable flexibility” in negotiating the trade deal, reported Reuters, despite having a trade deficit with the ASEAN bloc. India’s exports to ASEAN were US$16 billion in 2007-2008, while its imports reached US$24 billion.

The trade deal, which was concluded last month after four years of negotiations, will come into force 1 January 2009, opening a market that comprises combined population of over 1.7 billion and a gross domestic product of almost US$2.4 trillion. Under the agreement import tariffs will be reduced or eliminated on 71 percent of traded goods by the end of 2012, and on another 9 percent three years later.

Negotiations stumbled last year over a list of 1,400 ’sensitive items’ India wanted to exclude from the trade deal. However, the list has been reduced to 489 items and the import tariffs on those - now in the range of eight to 10 percent - are scheduled to be reduced to five percent by 2015.

While the trade deal does not cover trade in services and investment, talks on these are expected to begin soon.

Trade between India and the ASEAN nations - Brunei, Cambodia, Indonesia, Laos, Malasyia, Myanmar, the Philippines, Singapore, Thailand and Vietnam - reached US$38.4 billion in the 2007-2008 fiscal year.

ICTSD reporting; “India-ASEAN to sign trade pact on Dec 18: Ramesh,” THE ECONOMIC TIMES, 29 September, 2008; “India to sign ASEAN trade deal mid-Dec - minister,” REUTERS, 29 September, 2008; “India, ASEAN conclude free trade agreement,” XINHUA, 29 August, 2008.