India's negotiations with ASEAN for a comprehensive services and investment agreement are progressing at a “painfully slow” pace and major member countries fear that a ‘deal with India' would lead to the services market being taken over by the former.
Such are the reservations among countries like Singapore, Thailand, Malaysia and Vietnam that they are rather opting for Free Trade Agreements (FTA) at the bilateral levels rather than rushing in to formalise a multi-lateral deal on services and investments.
“The negotiations have already opened up but the progress has been painfully slow. The ASEAN countries are very defensive on services and are adopting different levels of defensiveness to prevent clinching an early deal. It will take time for things to materialise and an agreement will not be in place by August as anticipated earlier,” a senior official associated with the negotiations said.
Under the proposed services and trade agreement, India is demanding liberalisation of trade in services and investments, particularly movement of professionals. Once the pact is signed and implemented, Indian professionals will be able to increase their presence in ASEAN countries substantially. India has already signed the FTA on goods with ASEAN which came into effect from January 1, 2010.
Officials said those nations, which wanted to do business with India and saw a huge potential in its buoyant economic growth, were now looking at bilateral trade agreements rather waiting for the ASEAN services and investment agreement to happen. “A case in point is Malaysia and Singapore. While Malaysia is keen on an FTA within this year itself, Singapore is re-negotiating the FTA signed in 2005 with the intention to infuse more dynamism in the treaty,” the official added.
Interestingly, this trend is being witnessed in other parts of the globe as far as India is concerned. At present, officials in the Commerce Ministry said India was in the process of holding negotiations or finalising bilateral trade agreement with nearly 20 countries of which nearly half-a-dozen are major trade partners of India.
It had recently put in place a comprehensive agreement with South Korea and is in the advanced stage of negotiations with Japan. The 27-nation European Union and India are also holding extensive talks to clinch a deal on FTA within this year.
“Rather than bat or wait for multi-lateral agreements to happen, nations prefer to hold individual trade talks with an intention to expand trade and investment with India,” another official said.