Free Trade Agreement with ASEAN
Recently the Commerce Minister has underlined the need to renegotiate the Free Trade Agreement (FTA) with ASEAN to prevent misuse by third parties.
The ASEAN-India Trade in Goods Agreement was signed in the year 2009. This agreement entered into force in the year 2010.
The ASEAN-India Trade in Services Agreement was signed in the year 2014. This includes provisions for transparency, domestic regulations, identification, market access, national practice and dispute settlement.
Need for reconsideration:
- India’s trade deficit with ASEAN has increased over the past few years.
- India has urged the ASEAN grouping for reciprocal FTA concessions for imports from India. Through this, India wants to end the situation of trade imbalance arising due to the inclination of trade in favor of ASEAN.
- India has also called upon ASEAN countries to stop the overflow of Chinese products into Indian markets. It is to be known that these Chinese products are harming the domestic industries.
- India has emphasized on tightening the Rules of Origin (ROO) and strong provisions to remove non-tariff barriers and establish better market access.
- ROO are the criteria required to determine the national source of a product.
- It is also important to improve the utilization rate of FTAs.
- According to a NITI Aayog study, the utilization rate of regional trade agreements by Indian exporters is low (between 5% and 25%). This is because of the difficulties in deliberating on the rules.
- This will help India to build manufacturing hubs for various products such as pharmaceuticals and information technology-enabled services.
Source – The Hindu