A richer partnership

Given the heterogeneity of ASEAN countries, the agreement is not "clean", in that it follows a 8+1+1 pattern that implies there will be three separate arrangements, one pertaining to eight ASEAN members and two concerning Indonesia and the Philippines respectively. The specific terms for these two countries are due to the fact that services represent a vital share of their economic growth, and there are concerns that they might lose more than they gain in competing with India's strong services sector. While both Indonesia and the Philippines are worried about competition from India in IT services, it appears to be a bigger concern for the Philippines, with more than half of its workforce engaged in outsourcing.

Given the individual concerns in ASEAN, India has also been negotiating bilateral trade agreements with individual members. It already has bilateral FTAs with Singapore and Malaysia and is in the process of negotiations with Indonesia and Thailand. Notably, the Comprehensive Economic and Cooperation Agreement (CECA) with Singapore (operational since 2005) has played a pivotal role in fostering economic relations between the two countries, and has resulted in Singapore becoming India's largest trade and investment partner in the ASEAN block, with the country also emerging as a key offshore logistics and financial hub for many Indian corporations. While the CECA with Singapore primarily covers provisions for liberalisation in trade in goods and services, the CECA with Malaysia (signed in 2011) is relatively more limited in scope.

India also has Comprehensive Economic Partnership Agreements (CEPAs) with other east Asian economies such as Japan and Korea. The CEPAs with Korea and Japan, in comparison to India's other FTAs in the region, go beyond the traditional provisions of tariff liberalisation, services, investment and trade facilitation to cover issues of government procurement and competition policy, which are fundamental to furthering holistic economic engagement through FTAs.

... contd.

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