Bridges Weekly Trade News Digest • Volume 13 • Number 30 • 9th September 2009
India Signs Trade Deals with South Korea, ASEAN
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India expanded its trade on two fronts by signing trade agreements with South Korea and the 10-member Association of Southeast Asian Nations (ASEAN) in August.
After more than three years of negotiations, India and South Korea signed a Comprehensive Economic Partnership Agreement covering trade in goods, services and investment, and international property rights. Both countries agreed to gradually lower tariffs over a 10-year period, once the South Korean National Assembly ratifies the agreement.
Indian and South Korean officials applauded the pact, which represents Seoul’s first such deal with an emerging economy and India’s first with a major developed country. “We will be able to have access to one-sixth of the global market,” South Korean Trade Minister Kim Jong-hoon said at a joint press conference with India’s Minister of Commerce and Industry Anand Sharma.
According to a statement from Kim, South Korea not only expects to increase exports and diversify investment, but also to pave the way for future agreements with other South Asian nations. India, a more service-driven country, will benefit from the possibility of greater human resource exchange, including allowing Indian software experts and engineers easier access to the South Korean market. Trade between the two countries has been growing: it reached US$15.6 billion in 2008, and should grow by another US$3.3 billion in 2010 after the deal is signed.
Six days after signing the trade deal with South Korea, India inked a similar agreement with ASEAN at a meeting hosted by the Commerce Minister of Thailand, Porntiva Nakasai, current chairwoman of the regional bloc. The deal has been called a milestone after 6 years of discussions.
“The agreement comes at an appropriate time taking into account the current world economic crisis,” Nakasai said in a statement. The regional bloc has been creating trade deals with major neighbouring economies in an effort to forge through the global economic crisis.
The Trade in Goods Agreement between India and ASEAN cut tariffs by 80 percent as of 1 January 2010. The agreement has added flexibility to protect more sensitive domestic goods and will allow the use of safeguards for up to four years if liberalisation hurts domestic industry, according to Sharma’s statement.
ASEAN is one of New Delhi’s most important trading partners; the bloc accounts for 10 percent of India’s global trade, according to a statement from Sharma.
India’s agreement with South Korea also allows for protection of vulnerable industries, such as farming and forestry, which both countries have conceded to establish a lower level of market opening.
ICTSD reporting;”South Korea, India sign free trade agreement,” AP, 7 August 2009; “South Korea, India to sign bilateral trade agreement,” THE ECONOMIC TIMES, 6 August 2009; “ASEAN, India sign free trade deal: officials,” AFP, 13 August 2009.
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