India looks for last-mile gains in Services Pact with Asean

[Rage]

India looks for last-mile gains in services pact with Asean

AMITI SEN

Prime Minister Manmohan Singh with otherAsean leaders at the recent ASEAN-India Commemorative
Summit held in New Delhi.

10-nation group offers little market access on services

New Delhi, Jan. 13:

Diplomatic compulsions forced New Delhi to accept a lack-lustre services and investment deal with the Asean countries, but the negotiating team is still hopeful of making some last-minute gains while drafting the final agreement.

"The Prime Minister's Office wanted us to close negotiations during the commemorative summit last month for diplomatic reasons, else we would have tried harder for a more substantive pact. However, we will try and see if we can make some gains while we put final papers together," a Government official told Business Line.

Asean members have offered very little in terms of increased market access in services to India, especially when compared to what they have given partners like Australia and New Zealand. The 10 countries have been very conservative in their offers on allowing more access under Mode 4 to professionals, keeping the IT sector out of the agreement.

Asean has offered longer visa permits and other qualification relaxations to professionals from Australia and New Zealand, which go beyond the commitments made at the World Trade Organisation, but have refused to give similar concessions to India.

"If we had six months more, we could have indeed tried to get a better deal. But we had no option but to close negotiations," the official said.

Indian negotiators will now try to seal whatever little gains that they have been able to make in select services by putting in place time-lines in the final schedules.

"We will try to fix a date for finalisation of mutual recognition agreements in various categories so that our professional qualifications get easy recognition in the Asean countries," the official said, adding that they would try to make similar manoeuvres in other areas.

India lost much of its negotiating power in the services deal when it agreed to Asean's demand of delinking the trades in goods pact and sign it early. The India-Asean goods free trade agreement (FTA) is expected to double bilateral trade to $200 billion by 2022.

The Asean countries have a lurking fear that Indian services export will ruin their industry, but it is completely unfounded, said trade expert Ram Upendra Das working with research organisation RIS.

In fact, the Philippines and Indonesia have forced India to agree to two separate pacts with them with negligible offers for professionals.

"There are a number of sectors like construction and engineering where the Asean countries are very competitive," Das said.

The other Asean countries include Cambodia, Brunei, Myanmar, Malaysia, Thailand, Singapore, Vietnam and Laos.

Prime Minister Manmohan Singh, right from the beginning of the UPA's first stint, has been keen on developing closer ties with South East Asia in line with the Look East policy first advocated by Narasimha Rao in the early nineties.

Some trade experts say that in order to gain a foot-hold in the region, India has been giving far too many concessions in its trade deals with these countries.

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Business Line : Industry & Economy News : India looks for last-mile gains on services pact with Asean

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Does this recast our relationship with Asean nations? Should India be giving generous economic and market concessions to Asean countries in order to gain a strategic footprint in the region?

What does the pace and extent of concessions say about the urgency of strategic engagement?

How has China traditionally engaged Asean countries, especially in light of economic competition from Japan and S Korea and the longstanding US military presence there?

@Sakal Gharelu Ustad, @pmaitra, @amoy, @p2prada. @thakur_ritesh, @asianobserve.

 

[thakur_ritesh]

@Rage,

As the article has rightly pointed out, the mistake was made right at the start when the mercantile and service trade negotiations were separated, but then China was walking away with the show and we had to have a trade deal with a region that has both economically and strategically become very important for us.

Post the mercantile FTA in place, there was time when the ASEAN was not even talking on the services FTA and they had developed cold feet on the issue, so from those days we have covered quite a ground, and yes, it was expected that we won't be able to completely pull it off to the extent our IT industry wanted it but all that has been achieved meets the requirements/guidelines set by the WTO.

India is doing a smarter thing that the article doesn't mention. Even with a FTA in place with the ASEAN, we are still negotiating FTAs with individual countries, it is here special concessions are being offered far beyond the requirements of the WTO, and I suspect it is here we will very aggressively push the services sector. We are having same probs with the EU, and we have come up with a similar solution.

I am not very sure if it was all strategic compulsions, but yes, as has happened with the EU FTA, more time could have been bought, no one was going to say no further negotiations, but then the delay had been happening for long. Here is a group of countries, with whom we have land connection (Myanmar is a part of ASEAN), a region showing good economic growth, a region where Indian companies have a decent presence, a region with whom our trade volume is increasing decently well, so just pure economics made a lot of sense in pushing the FTA and then in these negotiations, the trade bodies have always worked out the opportunities that come our way, and not many seem to be making it a talking point, so I guess, not all that bad in the end.

As far as getting a strategic foothold, well if one very closely follows all that India has achieved militarily and diplomatically in the region, it hasn't been a disappointment. It is another thing that for now we don't want to push for our serious military presence, but a tit-for-tat to China is definite on cards.

In the end, even if a serious spin off is over aggressive push to strategic relations, I would say not bad at all.