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India reviews continuation of trade pact with Asean
Thursday, August 6, 2020
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India reviews continuation of trade pact with Asean

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NEW DELHI: The government is reviewing the continuation of the free trade agreement (FTA) with Asean in the wake of the trading bloc’s reluctance to address India’s concerns over what it believes are asymmetries in the decade-old treaty.
The government’s main grouse is the rising trade deficit with the 10-country grouping, many of which is seen to be Chinese goods that are routed via some of the Asean members.
As reported first by TOI on July 22, the government is looking to revamp its strategy on FTAs with finance minister Nirmala Sitharaman too hinting at it. “Reciprocal arrangements are being asked with the countries with which we have opened up our markets. Reciprocity is a very critical point in our trade negotiations,” she said at a Ficci event on Friday.

India reviews continuation of trade pact with Asean

The Narendra Modi government has blamed the trade arrangements worked out by the UPA for a large part of the problem of trade deficit, arguing that the agreements with Asean, South Korea and Japan were signed in haste and India’s interests were not adequately protected. As a result, commerce and industry minister Piyush Goyal has been demanding renegotiation of certain provisions under a review mechanism, something that Asean has so far refused to accept.
It has told India that the review can only take place after it concludes the Regional Comprehensive Economic Partnership (RCEP) with China, Australia, New Zealand, Japan and Korea, showing its reluctance to engage. At least three highranking officials in the administration told TOI that the government was looking at the option of exiting some of the FTAs, especially the one with Asean, if the terms of engagement were not in India’s favour.
The lower-duty or duty free mechanism is being blamed for import surge in several products — from agarbattis to air-conditioners and TV sets. Government sources accused trade partners of using tools, which were not fair to push their goods into the country, while erecting barriers for entry of Indian goods and professionals, cited as the biggest gain from the treaties.
In recent years, starting with the threat to block a WTO agreement on trade facilitation in 2015 to walking out of RCEP discussions, India has hardened its stance in global engagements.
Sitharaman, Goyal and Bibek Debroy, who heads the Economic Advisory Council to PM, are looking at the options to strengthen India’s trade engagements and a review of existing FTAs.
In Video:India reviews continuation of free trade pact with ASEAN



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