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ASEAN-INDIA Free Trade Agreement

ASEAN-INDIA Free Trade Agreement. Status of negotiation Modality for goods liberalization Progress to date and the way ahead. The MANDATE: Framework Agreement.

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ASEAN-INDIA Free Trade Agreement

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  1. ASEAN-INDIAFree Trade Agreement Status of negotiation Modality for goods liberalization Progress to date and the way ahead

  2. The MANDATE: Framework Agreement 8 Oct. 2003 - Framework Agreement (FA) on the Comprehensive Economic Cooperation was signed by the Leaders at the 2nd ASEAN-India Summit in Bali, Indonesia The FA serves as the basis for establishing the ASEAN-India Free Trade Area (FTA) - by 2011 for ASEAN 5 - by 2016 and beyond for RP and CLMV with flexibility on sensitive sectors / commodities

  3. Negotiation Timeframes • Trade in Goods: 2004-2008 * Series of deadlocks due to unresolved issues on Modalities and ROO hence the Leaders’ extension of timeline • Trade in Services and Investment: 2008-2009 • Other Areas of Economic Cooperation: Negotiations to proceed at a pace acceptable to all Parties concerned

  4. Trade in Goods Agreement • FA: Provides for the substantial reduction & elimination of tariffs and other barriers to establish the ASEAN-India FTA With the delay in the negotiations: • Current modality timelines for the tariff elimination (NT1 and NT2) • 2012 and 2015 for A-5 & India • 2017 and 2018 for RP and India • 2017 and 2020 for CLMV & India

  5. AIFTA –TIG Modality General modality - tariff reduction/ elimination: A. Normal Track (NT) - NT1 and NT2 The MFN tariffs of products listed under this track will be eliminated B. Sensitive Track (ST) The MFN tariffs of products listed under this track shall consist of products whose applied MFN rates shall be reduced or eliminated in accordance to agreed end rates and dates Includes: Sensitive List (SL), Highly-Sensitive List (HSL) and Exclusion List (EL)

  6. AIFTA –TIG Modality

  7. AIFTA –TIG Modality (cont.)

  8. AIFTA –TIG Modality (cont.)

  9. PROGRESS to date • Held four (4) years of trade negotiations for goods liberalization (which commenced in 2004) marked by series deadlocks relating to issues on modality issues ROO (India’s proposed exclusions of ASEAN’s export interests) • Completion of the negotiations on TIG Modality for tariff reduction/ elimination - (Announced during the 40th ASEAN Economic Ministers’ Meeting in Singapore, Aug. 2008) * Succeeding TNC meetings at substantive critical stage

  10. THE WAY AHEAD Firming up and submission of Parties’ schedule of tariff concessions within the agreed modality by first week Oct.  Finalization of the TIG Agreement (21st AITNC meeting in Oct.) and legal scrubbing (Nov.)  Signing of the AIFTA’s TIGA (Leaders’ Summit in December 2008) AIFTA’s EIF is envisaged in 2009

  11. ASEAN-INDIAFree Trade Agreement THANK YOU

  12. [ Additional Notes on FTA’s Economic Gains ]

  13. Additional Notes: Econ. Gains • The FA hopes to establish the world’s 2nd largest FTA of 1.55 billion consumers with regional GDP of about US$1.1 billion, and total trade estimated at US$820 billion • The FTA provides for: • Enhanced economic efficiency • Greater Intra-ASEAN Trade • Deepened specialization in production based on comparative advantage

  14. Additional Notes: Econ. Gains • Trade creation as a result of lowering of tariffs • Improved factor mobility • Enhanced intra-ASEAN bargaining power • Improved regional real income • Greater market access resulting to economies of scale

  15. Additional Notes: Econ. Gains • Lower prices and a greater variety of goods and services made available by market liberalization and increased competition • Enhanced strategic alliances between ASEAN and India’s industries • Greater foreign direct investment in the region • Increased cooperation in R&D

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