INTRODUCTION[/b]
The growth of regional trading blocs has been one of the major developments in international relations in recent years. Virtually all countries are members of a bloc and many belong to more than one; more than one third of world trade takes place within such agreements. Regional agreements vary widely, but all have the objective of reducing barriers to trade between member countries and hence, implicitly, of discriminating against trade with other countries. At their simplest they merely remove tariffs on intra-bloc trade in goods, but many go beyond that to cover non-tariff barriers and to extend liberalization to investment and other policies. At their deepest they have the objective of economic union, and involve the construction of shared executive, judicial and legislative institutions. For want of as better term, we lump all of them under the heading of Regional Integration Agreements (RIAs).
The evolution of the Indian economy, from a state of stagnant - growth governed by a socialist, import substituting regime, into its emergence as the second fastest growing economy since the adoption of economic policy reforms in 1991, defies conventional economic wisdom. India's role in the Asian region as well as in the global market has grown significantly over the years and after the global financial crisis of 2008, its importance cannot be denied any more. The crisis of 2008 which began as financial in nature and then became general economic crisis has once again reiterated the need for strengthening the process of region-al integration in Asia. The crisis has exposed the fragility of existing global financial and economic institutions mainly existing in the USA and Europe. The Asian economies on the other hand have shown much more resilience and are on the path of recovery. Emerging trends now point towards a shift in traditional engines of growth from industrial countries to emerging economies. This Asian recovery is led by China and India.
INDIAS INVOLVEMENT IN RIA[/b]
India, as one of the largest economies in Asia has played a pivotal role in regional integration. India has always stood for an equitable, predictable, and nondiscriminatory and rule based international trading system. It views Regional Trade Agreements as building blocks towards the overall objective of trade liberalization, which complement the multilateral trading system. The gains from Asian regional economic integration could be substantial if it's realized through well designed RTAs. While initially India adopted a rather cautious and guarded approach to regional arrangements, for quite some time now, an important feature of India's foreign policy has been the strengthening of regional co-operation.
Asian developing countries had in the past also made a number of attempts at regional economic
co-operation. The Bangkok agreement of 1975 (which included India, Lao PDR, South Korea and Sri Lanka) and Asian clearing Union of 1974 (which included Bangladesh, India, Iran, Myanmar, Nepal, Pakistan and Sri
Lanka) were some of the regional integration efforts initiated in the 1970s.Despite, these efforts did not pay dividends given the limited coverage of membership and products as well as the limited scope of the agreements. However inspired by the success of the North American Free trade Agreement (NAFTA) and the European Union, renewed regional integration efforts were observed in the 1990s. Consequently the ASEAN Free Trade Agreement (AFTA) came into force in 1997 and the SAARC Preferential Trading Agreement (SAPTA) in 1995.
But it was the East Asian Economic crisis of 1997 that proved to be the turning point. The crisis highlighted the need for greater regional co-operation among the Asian economies and since then several regional as well as bilateral initiatives have been introduced. The ASEAN economies now have FTAs in force with India (2009), China (Goods agreement 2005, Services agreement 2007), Korea (2006) and Japan (2008) and a joint agreement with Australia and New Zealand (2009). Also deeper economic integration is being sought through the “Comprehensive Economic Partnership in East Asia”(CEPEA), whose underlying ambition is to establish an ASEAN + 6 FTA (ASEAN and China, India, Japan, S Korea, Australia and New Zealand). The SAARC region also moved from a preferential trading agreement to a free trade agreement (SAFTA) in 2004. An important sub-regional initiative is the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC FTA), the protocol agreement for which was signed in 2004. The BIMSTEC initiative involves 2 members from ASEAN (Thailand and Myanmar) and 5 members from SAARC (India, Bangladesh, Bhutan, Nepal & Sri Lanka) and is seen as a bridge between the two major regional groupings. India has been rigorously pursuing unilateral liberalization and has entered into various trade agreements with the Asian economies as part of trade facilitation initiatives. India has traditionally favored multilateralism over regionalism. However over the last two decades, geo-political considerations have led India to seek regional integration initially with South Asian countries and later with the economies of South East and East Asian countries. India has signed various trade agreements with countries outside Asia as well. Within Asia India has entered into Trade Agreements with ASEAN and South Asia (SAFTA), in addition to bilateral trade agreements with Sri Lanka, Nepal, Afghanistan, Singapore and Korea. Also negotiations for trade agreements are going on with various other Asian economies which include Japan, Malaysia, Thailand, and Mauritius. However, at present most of these agreements only cover goods. These RTAs have indeed led to increased trade. For instance the implementation of the Comprehensive Economic Partnership Agreement (CEPA) earlier this year with Korea, led to a 70percent increase in bilateral trade between the two countries in the first four months of operationalisation. Also India has been experiencing increased investments from South Korea into India. The need for entering into comprehensive services agreement is of utmost importance to further the cause of regional economic integration. Currently there is a services agreement in place only with Singapore and Korea, while negotiations for a SAARC Agreement on Trade in Services (SATIS) are ongoing. India has competitive advantage in services and is keen to broaden its trade basket with Asian economies through increased share of services exports and therefore, great importance is attached to the early conclusion of negotiations of the on going Services Agreements.
Table 1: India’s con0cluded Free Trade Agreements[/b]
(FTAs)/Preferential Trade Agreements (PTAs)[/b]
FTAs/PTAs Date of Sign Date of Enforcement Area Covered[/b]
Asia Pacific Trade Agreement (APTA) 1975 June 1976 Goods[/b]
India-Chile PTA November 2005 September 2007 Goods[/b]
India-Sri Lanka FTA December 1998 March 2000 Goods[/b]
India-Nepal (Revised) FTA October 2009 - Goods[/b]
India-Afghanistan PTA March 2003 - Goods[/b]
India-Bhutan Trade Agreements 28 July 2006 29 July 2006 Goods[/b]
India-ASEAN FTA August 2009 January 2010 Goods[/b]
South Asia Free Trade Area (SAFTA) FTA January 2004 January 2006 Goods[/b]
India-Mercosur (Brazil, Argentina, Paraguay 2004 June 2009 Goods[/b]
and Uruguay) PTA[/b]
India-Singapore (Comprehensive Economic Jun 2005 August 2005 Goods, services,[/b]
Cooperation Agreement (CECA)) investments[/b]
India-Korea (Comprehensive Economic August 2009 January 2010 Goods, services, Partnership Agreement (CEPA)) investments,[/b]
Trade,[/b]
Facilitation.[/b]
Source: Ministry of Commerce and Industry and Asia Regional Integration Centre (ARIC)[/b]
India’s Ongoing FTAs/PTAs Negotiations
FTAs/PTAs Launch of negotiations and Status Area Covered[/b]
India-Japan (CEPA) January 2007 Negotiations completed. It will be signed soon. Goods, services, investments.
India-EU Broad based Trade and Investment Agreement (BTIA) June 2007 Government plans to sign it by the end of 2010. Goods, services, investments, government procurement, etc.
India-Gulf Cooperation Council (GCC)- Customs Union of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE 2004 First round of negotiations held in March 2006. No Progress till now.
India-Malaysia (CECA) February 2008 Negotiations completed. It will be signed soon. Goods, services, investments, etc.
India-Mauritius (Comprehensive Economic Cooperation and Partnership Agreement (CECPA)
August 2005 Negotiations on trade in goods concluded and MoU signed on a PTA, services and investments negotiations are ongoing. Goods, services, investment, etc.
India- European Free Trade Association (EETA) FTA, January 2008. Five rounds of negotiations held (Fifth round was in 20 August 2010) Goods, services, investment, etc.
SAARC Agreement on Trade in Services (SATIS) November 2008 Text agreement was signed in April 2010. Schedule negotiations will start soon. Services, investment, etc.
India-Thailand CECA November 2003 17 rounds of negotiations have been completed. Goods, services, investment, etc