Ahead of the Indo-Asean summit on free trade agreement on November 19, India is considering the proposal of suspending negotiations on both services and investment.
The move is being considered against the backdrop of disappointing response from countries such as Philippines and Indonesia in the services sector.
A note prepared by the ministry of commerce on the issue has floated three options that include suspending negotiations on both services and investments and resume these at a later date.
The second options in consideration is concluding the services agreement on the basis of existing offers and conclude separate agreements with AMS (Asean member states) and separate ones with the Philippines and Indonesia.
The third option being considered by India says ‘restrict the investment agreement to only an Investment Promotion Agreement given the wide divergence in positions on investments.’
The note clearly expresses India’s disappointment with Indonesia and Philippines saying, “While India would have expected a better services offer from all Asean members it is clear that Philippines and Indonesia are not inclined.�
Under the services sector, India wants greater opening in the Mode IV category to ensure that professionals like doctors, nurses, accountants, chefs, get more job opportunities in the Asean member states that include Brunei, Cambodia, Laos, Indonesia, Malaysia, Myanmar, Singapore, Philippines, Vietnam and Thailand.
Prime minister Manmohan Singh would be travelling to Cambodia on November 19 to attend the Asean summit this year.
India had signed the ‘Trade in Goods’ agreement with a focus on tariff liberalisation with Aseanin 2009. The agreement on goods targeted elimination of tariffs on 80% of the tariff lines accounting for 75% of the trade in a gradual manner starting from 1st January, 2010.
India’s trade with Asean countries has grown at a rate of 42% in the past two years.
Exports to Asean countries have touched $36 billion in 2011-12 while imports have touched $25.7 billion in the same period. The government expects that the full tariff reduction on 64% of the lines will be completed only by December 2013 and it would be too early to gauge full impact of the FTA.
Why is India trading import tariff reduction for Asean with human export to Asean?