India's engagement with the Association of South East Asian Nations (ASEAN) started with its "Look East Policy" in the year 1991. ASEAN has a membership of 10 countries namely Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. India became a Sectoral Dialogue Partner of ASEAN in 1992 and Full Dialogue Partner in 1996. In November 2001, the ASEAN-India relationship was upgraded to the summit level.
The 1st ASEAN Economic Ministers (AEM) - India Consultations were held on 15th September 2002 in Brunei Darussalam where the Ministers, after discussing the Joint Study Report decided to establish an ASEAN-India Economic Linkages Task Force (AIELTF). The AIELTF was asked to prepare a draft Framework Agreement to enhance the ASEAN-India trade and economic cooperation before the 2nd AEM - India Consultations. Subsequently, at the First ASEAN-India Summit held on 5 November 2002 in Phnom Penh, Cambodia, the erstwhile Prime Minister of India made the following major announcements:-
i. India will extend special & differential trade treatment to ASEAN countries, based on their levels of development to improve their market access to India;
ii. FTA within 10 years timeframe; and
iii. India is committed to aligning its peak tariffs to East-Asian levels by 2005.
A Framework Agreement on Comprehensive Economic Cooperation between the Association of South East Asian Nations (ASEAN) and India was signed by the Prime Minster of India and the Heads of Nation/Governments of ASEAN members during the Second ASEAN - India Summit on 8th October 2003 in Bali, Indonesia.
The key elements of the Framework Agreement on Comprehensive Economic Cooperation between the Association of South East Asian Nations (ASEAN) and India cover FTA in Goods, Services and Investment, as well as Areas of Economic Cooperation. The Agreement also provides for an Early Harvest Programme (EHP) which covers areas of Economic Cooperation and a common list of items for exchange of tariff concessions as a confidence building measure. The highlights of the Framework Agreement are as follows:-
Negotiations to commence from January, 2004 and to be concluded by 30th June, 2005.
The tariff reductions will start from 1st January, 2006 and Most Favoured Nations (MFN) tariff rates to be gradually eliminated. While India will eliminate tariffs in 2011 for Brunei Darussalam, Cambodia, Lao PDR, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam; Brunei Darussalam, Indonesia, Malaysia, Singapore and Thailand will eliminate in 2011 and new ASEAN Member States i.e. CLMV will eliminate in 2016 for India. India and Philippines will eliminate tariffs for each other on a reciprocal basis by 2016.
When the Prime Ministers of India and Sri Lanka met in New Delhi in June 2002, they took cognizance of the significant expansion of trade made possible by the ISLFTA. However, they also noted that there was much scope for expanding the areas of coverage of economic cooperation. Accordingly, a Joint Study Group (JSG) was set up to explore ways and means of deepening and widening economic cooperation through a Comprehensive Economic Partnership Agreement (CEPA). Dr. Rakesh Mohan, Dy. Governor of RBI was the Co-Chair of the JSG. The JSG completed its study and had submitted its report to two Prime Ministers in October 2003 in New Delhi.
The summary of recommendations of the JSG was to :
Based on the inter-Ministerial consultations and apex chambers of commerce, the items for EHP were finalised for exchange of concessions. The EHP covers the following schedules as specified in the Annexes to the Agreement: -
The first meeting on CEPA at the Commerce Secretary level was held on 18th August, 2004 in Colombo. In this meeting, both sides highlighted the importance of deepening and broadening the scope of ISLFTA to CEPA. It was primarily an exploratory discussion broadly covering the scope of CEPA as well as use of JSG Report as a reference document for possible approaches and negotiations. This Ministry is having inter-ministerial consultations for proceeding further in this regard.
