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4th Meeting of ASEAN-India Trade in Goods Agreement Joint Committee

Context

The 4th Joint Committee meeting for the review of AITIGA (ASEAN-India Trade in Goods Agreement) occurred in Putrajaya, Malaysia.

Co-chaired by officials from India and Malaysia, delegates from all ASEAN countries participated.

The aim is to enhance trade facilitation and bilateral trade, which stood at USD 122.67 billion in 2023-24.

Analysis of the news

• The 4th Joint Committee meeting for the review of AITIGA (ASEAN-India Trade in Goods Agreement) took place in Putrajaya, Malaysia from 7-9 May 2024.
• Delegates from India and all 10 ASEAN countries participated in the discussions.

ASEAN Countries

• The Association of Southeast Asian Nations (ASEAN) comprises ten member states: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
• Established on August 8, 1967, to promote political and economic cooperation and regional stability.
• ASEAN’s core principles include non-interference in internal affairs, consensus-based decision-making, and peaceful resolution of conflicts.
• It fosters economic integration through initiatives like the ASEAN Economic Community (AEC), aiming for a single market and production base.
• ASEAN also addresses social, cultural, and environmental issues, enhancing collaboration in areas like education, healthcare, and sustainable development.
• The review discussions started in May 2023 to make AITIGA more trade-facilitative and beneficial for businesses in the region.
• The Joint Committee met four times, finalising its Terms of Reference and Negotiating Structure in the first two meetings.
• Eight Sub-Committees were constituted, with five initiating discussions on different policy areas of the Agreement.
• ASEAN accounts for 11% of India’s global trade, with bilateral trade reaching USD 122.67 billion during 2023-24.
• Upgrading AITIGA is expected to further boost bilateral trade between India and ASEAN.
• The 5th Joint Committee meeting is scheduled for 29-31 July 2024 in Jakarta, Indonesia, where further discussions will take place.

Importance of ASEAN for India and AITIGA (ASEAN-India Trade in Goods Agreement):

• Strategic Partnership: ASEAN (Association of Southeast Asian Nations) is crucial for India’s “Act East” policy, fostering strategic partnerships and enhancing engagement with Southeast Asia.
• Trade and Economic Cooperation: ASEAN is India’s fourth-largest trading partner, and the region plays a significant role in India’s trade and economic diversification efforts.
• Regional Stability: ASEAN promotes peace, stability, and security in the Asia-Pacific region, aligning with India’s interests in a peaceful and prosperous neighborhood.
• Connectivity and Integration: ASEAN facilitates connectivity initiatives such as the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multi-Modal Transit Transport Project, enhancing regional integration and economic cooperation.
• Cultural and People-to-People Ties: ASEAN fosters cultural exchanges, tourism, and people-to-people contacts, strengthening India’s cultural diplomacy and soft power in the region.
• Multilateral Forums: ASEAN serves as a platform for India to engage in multilateral forums like the East Asia Summit (EAS) and the ASEAN Regional Forum (ARF), promoting dialogue, cooperation, and mutual understanding in the region.

AITIGA (ASEAN-India Trade in Goods Agreement):

• Background and Initiation: AITIGA (ASEAN-India Trade in Goods Agreement) review discussions began in May 2023, following agreements at the 16th ASEAN-India Economic Ministers Meeting in September 2019.
• Objectives and Scope: The review aims to enhance trade facilitation, simplify rules, and promote cooperation on supply chains and MSME development. Specific focus includes Rules of Origin (ROO) simplification and mutual acceptance of standards.
• Market Access Concerns: India seeks to address imbalances in market access commitments, including higher tariff elimination by India compared to some ASEAN countries.

Trade Trends:
a. Export Growth: India’s exports to ASEAN increased from US$ 19.14 bn in 2008-09 to US$ 42.33 bn in 2021-22, with a Compound Annual Growth Rate (CAGR) of 5.83%.
b. Import Surge: Imports from ASEAN rose from US$ 26.2 bn in 2008-09 to US$ 68.07 bn in 2021-22, with a higher CAGR of 7.06%.
c. Trade Imbalance: India’s trade deficit with ASEAN tripled from US$ 7.06 bn in 2008-09 to US$ 25.75 bn in 2021-22.
d. Forecasted Trend: Forecasts suggest a continuation of this trend, with imports growing faster than exports.
e.  Deficits with ASEAN Countries: India had deficits with five ASEAN countries in 2008-09, increasing to seven by 2018-19, with only Cambodia, Laos, and The Philippines showing a surplus for India.

• Sectoral Analysis: While some sectors like agriculture have seen growth, others like steel and machinery have faced challenges. Pharmaceutical exports to ASEAN have not performed as well as in other markets.
• Future Considerations: The review must address current market conditions, including the impact of RCEP and India’s evolving FTA strategy, to ensure AITIGA remains relevant in the changing trade landscape.