[A-List] India: also on FTA bandwagon

["Michael Keaney" <michael.keaney@xxxxxx>]

India seeks free trade with Asean inside 10 years
By Amy Kazmin in Phnom Penh
Financial Times; Nov 06, 2002

India yesterday proposed establishing a free-trade area with the Association
of South East Asian Nations (Asean) within 10 years. The announcement came
just a day after Asean pledged to form an economic union with China by 2010.

Like Beijing, New Delhi is willing to extend special concessions to Asean's
newest and most economically fragile members, and also to have a so-called
"early harvest" that would see quick reductions in tariffs on selected
goods.

"The economic linkages that exist today are inadequate and do not reflect
the strength of India and Asean," Yashwant Sinha, India's foreign minister,
told reporters. "This is a region which is in our neighbourhood, and we are
interested in building linkages with our region. We are convinced that Asean
is equally and strongly interested in this relationship with India."

India, which took the first steps towards dismantling its so-called "licence
raj" economy just over 10 years ago, "is a late starter" in the courtship of
Asean when compared with north-east Asian countries, Mr Sinha acknowledged,
and its economy still lags far behind China's.

India's annual trade with Asean countries is put at just $10bn (ý6.5bn), a
quarter of the estimated $40bn in trade that took place between China and
Asean last year.

But India has already initiated talks on free-trade deals with several
individual Asean members, including Thailand, and said a joint India-Asean
task force will draft a "roadmap", for a regionwide agreement for
consideration next year.

New Delhi has been watching warily in recent years as China - with which
India fought a brief but traumatic border war in 1962 - exerts growing
political and economic clout in south-east Asia, particularly in Burma,
which adjoins India.

Beijing's growing role in south-east Asia comes as prospects for India to
strengthen economic relations with its own closest neighbours - the fellow
members of the South Asia Association for Regional Co-operation (Saarc) -
remain clouded by its bitter rivalry with Pakistan.

New Delhi formulated its so-called Look East policy before the 1997 Asian
financial crisis, though progress has been slow until now. "While we are
trying to make progress in Saarc, that should not prevent us from moving
forward with Asean," he said.

Mr Sinha denied that Delhi's overtures to Asean reflected concern about
Chinese dominance of the area. "We are not in competition with any country,"
he said.

Still, some Asean countries may be looking to India - if it can maintain the
pace of its own economic reforms and growth - as a potential counterbalance
to a rising power that they too still view with trepidation.