India and ASEAN agree to review goods trade pact by 2025 to fix ‘asymmetry’

India and ASEAN agree to review goods trade pact by 2025 to fix ‘asymmetry’

India and ASEAN agree to review goods trade pact by 2025 to fix ‘asymmetry’

Context 

According to the Commerce Ministry, India and the ASEAN nations agreed to evaluate their free trade agreement for goods and set 2025 as the deadline for finishing the review, which was intended to address the “asymmetry” in bilateral trade.

What is  ASEAN-India Trade in Goods Agreement

The ten ASEAN member nations and India have a trade agreement called the ASEAN-India Trade in Goods Agreement (the “Agreement”).

At the 7th ASEAN Economic Ministers-India Consultations in Bangkok, Thailand in 2009, ASEAN and India inked the Agreement. The 2010-implemented pact is occasionally referred to as the ASEAN-India Free Trade Agreement.

Background information and agreement signing

  • The ten ASEAN (Association of Southeast Asian Nations) members and India have a trade agreement called the ASEAN-India Trade in Goods Agreement (AITIGA).
  • It was signed in 2009 in Bangkok, Thailand, during the 7th ASEAN Economic Ministers-India Consultations.
  • It is sometimes referred to as the ASEAN-India Free Trade Agreement and went into effect in 2010.

Trade Statistics and Impact:

  • Since it was put into effect, AITIGA has increased trade between India and ASEAN.
  • Due to the COVID-19 outbreak, commerce between India and ASEAN fell from US$97 billion in the previous year (2018-19) to US$86 billion in the 2019–20 year.
  • Trade volume had increased over time despite fluctuations, rising from US$81.3 billion in the 2017–18 fiscal year.

Scope and establishment of free trade area:

  • The Agreement only applies to the trade in tangible commodities and products; it does not extend to the trade in services.
  • It has its roots in the 2003 Framework Agreement on Comprehensive Economic Cooperation between India and ASEAN, which served as the framework for upcoming trade accords.
  • The ASEAN-India Free Trade Area is comprised of the AITIGA, the 2014 ASEAN-India Trade in Services Agreement, and the ASEAN-India Investment Agreement.
  • With a population of around 1.8 billion, this FTA constitutes one of the largest free trade zones in the world.

What did the recent review of the agreement portray?

Review of the ASEAN-India Trade in Goods Agreement (AITIGA):

  • India and the ASEAN nations have decided to examine their free trade agreement for goods.
  • The objective of the review is to resolve the “asymmetry” in bilateral trade, which denotes current inequities in trade flows between the two sides.

Formation of a Joint Committee:

  • To manage the evaluation procedure, a Joint Committee has been formed.
  • There are probably members of this committee from both India and the ASEAN nations.

Termination of Terms of Reference: 

  • The Joint Committee debated and concluded the review’s terms of reference.
  • The negotiations and discussions during the review process will follow these terms of reference.

Conclusion 

In summary, the review of the ASEAN-India Trade in Goods Agreement is a planned and structured process to address trade imbalances, enhance trade diversity, and foster mutual benefit. The involvement of high-level meetings and the establishment of a Joint Committee underpin the significance of this endeavour in the economic relations between India and ASEAN countries.