Philippines, Indonesia drive wedge between India, Asean

India is mulling suspension of negotiations on services and investment with Association of Southeast Asian Nations (Asean). In a meeting of Commerce and Industry Ministry on Friday, Commerce Minister Anand Sharma has concluded that the options with India are limited given the non-cooperation from certain members of Asean like Philippines and Indonesia.

In a note approved by the Ministry on Friday, it has said that India's trade with Asean is growing at a healthy pace with a CAGR of 42 per cent achieved over the last two years. Exports to Asean have doubled from $18 billion in 2009-2010 to over $36 billion in 2011-2012, while imports have registered a growth of 28 per cent growing from $25.7 billion to $42.5 billion.

Given the background India would have expected a better services offer from all Asean members, but it looks that Philippines and Indonesia are not inclined. In addition, our position on investment also remains far apart, the note further added.

In view of this, the Ministry argued that options with India are limited. As a first option, the Ministry has suggested a suspension of negotiations on services and investment and resume these at a later date.

In another option, it has said that it can also mull concluding the services agreement on the basis of existing offers and conclude separate agreement with eight Asean member States and separate ones with Philippines and Indonesia. Third option could be to restrict the investment agreement to only an Investment Promotion Agreement given the wide divergence in positions on investments.

The India-Asean summit is set to start on November 19. A Prime Minister headed panel on trade-related issues on Friday directed the ministry officials to conclude agreement for further opening of commerce with the Asean before the summit. Prime Minister Manmohan Singh who will be attending the summit in Cambodia, sought an update from Trade and Economic Relations Committee on the progress of the talks with Asean to widen the existing Free Trade Agreement (FTA) beyond goods to investment and services. Services are of importance to India as they contribute over 55 per cent of the country's Gross Domestic Product (GDP).

After implementing FTA in goods in 2010, India and the 10-nation bloc are engaged in negotiations to widen the pact. India wants service sector to be liberalised by removal of all the non-tariff barriers.-Rebuilding for the Better Philippines (November 03, 2012)