The negotiating team from Association of Southeast Asian Nations (ASEAN) will be in New Delhi from November 19-22 for the next round of negotiations on the review of Asean India Trade in Goods Agreement (AITIGA) as both try to complete the process by 2025.
“Virtual discussions are going on on multiple tracks. We hope we should see some movement when they come,” a senior official who did not wish to be named said.
The review which was agreed to in 2019 on the demand by India after imports from Asean surged and trade balance became huge is focussing on getting the balance back and checking likely use of the agreement by third countries.
The review covers eight areas and for each of these separate sun-committees have been set up. Apart from national treatment and market access and rules of origin the other areas covered by the ongoing review are standards, technical regulations and conformity assessment procedures; sanitary and phytosanitary; legal and institutional issues; customs procedures and trade facilitation; trade remedies and technical cooperation.
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India’s trade deficit with Asean widened from $ 4.98 billion in 2010-11, the first full year of operation of AITIGA to $ 38.4 billion in 2023-24. The deficit has fallen from $ 43.5 billion in the previous year. The deficit was $ 25.7 billion in FY 22
While rules of origin as such is not such a big issue, the concerns of India stem from the fact that supply chains of Asean countries and China have become deeply integrated in the past 15 years. China during this period increased its share of imports by Asean to 30% from 10% during that period while India’s share stagnated at 10%. Other countries’ share of Asean imports contracted.
Apart from trade, Chinese investments in Asean have boomed as it seeks to use these countries to export to geographies like Us and Europe where it is increasingly facing difficulties in direct exports.
China using the Asean route to misuse this FTA is a risk, the official said, adding that the issue is also a challenge for the grouping as Chinese investments in these countries have increased so addressing this would not be easy.
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