India And The ASEAN

To mark the 20th anniversary of India’s interaction with the ASEAN as a Dialogue Partner in 1992, India hosted a commemorative summit of the Heads of Government of the ASEAN in New Delhi on December 20-21 last year. The occasion was also the 10th anniversary of India’s Summit level partnership. It was for the first time that all the ASEAN Heads of Government converged outside the ASEAN region to hold a summit conference with another country. The regular annual ASEAN-India Summit was held only a month earlier in November 2012 in Phnom Penh, Cambodia, which was attended by Prime Minister Dr. Manmohan Singh.

The road map for future India-ASEAN cooperation was laid down in the report of the Eminent Persons Group’s (EPG), presented at the Phnom Penh Summit. The EPG, appointed by the 8th ASEAN-India Summit in October 2010, in the light of the varied and rich agenda that was covered in the last two decade, made significant recommendations, which could anchor the relationship for the future to further expand the engagement and cooperation across the board and take the ASEAN-India relationship to a strategic level. After Japan, China and South Korea, India is the fourth country to enter into strategic partnership with the ASEAN.

The importance of the occasion was enhanced considerably by the conclusion of the negotiations for the Free Trade Agreement in services and investments. The FTA for trade in goods was signed in 2009. Signing of the FTA in goods catalyzed impressive growth in trade between India and the ASEAN, jumping from US $ 39.1 billion in 2009 to $ 55.4 billion in 2010, a growth of 41.8 per cent accounting for 2.7 per cent of the total ASEAN trade in 2010. The target of US $70 billion set by the 8th India-ASEAN Summit in October 2010 to be achieved by the end of 2012, had been exceeded by $ 10 billion by March 2012. The agreement in services and investments is now ready to be signed any time. Once this is done, the stage would be set for the discussions on the Regional Comprehensive Economic Partnership (RCEP) which would bring together a market of more than 50 per cent of the world’s population and 30 per cent of the world’s GDP.

Looking back, the formation of the ASEAN in 1967 was motivated by the need to ‘evolve into an inter-dependent concert of nations, building institutional linkages’, to ensure peace to them since military alliances and military bases had only embroiled them in Cold War politics, without giving them the requisite sense of security. The ASEAN was therefore to be an instrument to create socio-economic stability. The challenge to the region’s security from trans-national, non-traditional threats, and non-conventional sources brought about a paradigm shift necessitating creation of instrumentalities of different kind and in different fields such as commercial, financial, economic, tourism, science and technology, physical connectivity, human resource development, capacity building, education and culture. To achieve these objectives, ASEAN created multiple forums such as ARF, Post-Ministerial Conferences, East Asia Summit, Mekong Ganga Cooperation, Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), ASEAN Committee on Disaster Management, ASEAN Economic Community, ADMM –Plus, and several other.

India’s engagement with the ASEAN has now diversified into several fields from Economic to political, security, and terrorism, defence, agriculture, tourism, transport, science and technology, surface, and sea connectivity, energy etc., and on several platforms. Having attained Summit level status in 2002 India sent out positive signals of its desire to accelerate its all round cooperation with the ASEAN. In 2003 at the Bali Summit India acceded to the Treaty of Amity and Cooperation which the ASEAN had concluded in 1976. It simultaneously joined the ASEAN in the Joint Declaration for Cooperation in Combating International Terrorism. On the economic front, it signed the Framework Agreement on a Comprehensive Economic Cooperation in the same year. In 2004 New Delhi, in another initiative signed the “ASEAN-India Partnership for Peace, Progress and Prosperity” which contained the vision of future cooperation. It was not merely a theoretical exercise. To give it a practical shape a ‘Plan of Action’ to implement the commitments within a time span of 2005-2010 was also simultaneously adopted and even before the expiry of this period, yet another ‘Plan of Action’ for the period 2010-15 was agreed upon on October 24, 2009 and adopted at the 8th ASEAN-India Summit at Hanoi in October 2010.

The Look East policy of India received a fillip, when New Delhi decided to integrate the economic development of the States of the Northeast, on the periphery of Southeast Asia, with the region. The paradigm of this development was to blend the new initiatives seamlessly in our foreign policy formulations directed at the region. The Rs. 5,500-million Kaladan Multi-modal Transport facility gradually taking shape in cooperation with Myanmar, which when completed would give this strategic but important corner of India a link to the Southeast Asia besides, an alternative link to the rest of India. The proposed India-Myanmar-Thailand Trilateral Highway Project, expected to be operational in 2016, would represent another significant step in establishing connectivity with the ASEAN region. The trilateral interaction among India, Japan and the United States in October 2012 promises to the take the highway project further all the way to Vietnam. It may be recalled that Prime Minister Dr. Manmohan Singh in his speech at the Bali ASEAN- India Summit on November 9, 2011 while speaking about the need for greater connectivity between India and the Southeast Asian region had also hinted at the India-Myanmar-Thailand highway’s extension to Laos, Cambodia and finally to Vietnam. The two ASEAN car rallies—one held now in December 2012 to coincide with the 20th anniversary commemorative summit, and the other held earlier in 2004—have helped emphasise geographic connectivity in all its dimensions—human, infrastructural, economic, technological and cultural. The message of these rallies is also to convey friendship, harmony and peace between the peoples of India and the ASEAN. It would catalyse tourism and people-to-people contacts. The major beneficiary of all these initiatives would be the Northeast region of India, which is now pulsating with the new emerging ideas. It is a new experience for the people of the region. It was evident from what the Minister for the Development of North Eastern Region, Paban Singh Ghatowar told the 158th Annual General Meeting of the Bengal Chamber of Commerce and Industry on September 28, 2012 in Kolkata. He said, in “over the two decades, economic and strategic connections with Southeast Asia have increased manifold” and that “India’s trade and economic links with Singapore, Malaysia, Indonesia, Thailand and Vietnam have experienced rapid progress”. Speaking at another meeting on the subject of “Look East—North East and Beyond”, he referred to the Northeast Vision 2010 Document released by Prime Minister Dr. Manmohan Singh in 2008, which recommended a structural transformation of the region in terms of development to catch up with the rest of the country. Minister Ghatowar observed that the North East Region ‘can become the main hub of India’s economic bonding with both Bangladesh, and Southeast Asia because of the contiguous land borders between the two regions’.

 HOW TO MULTILATERALISE ASIAN REGIONALISM

The Asian Financial Crisis of 1997-98 provided the impetus for the region to look to increased regional cooperation to reduce its vulnerability to future financial shocks. The Chiang Mai Initiative, a reserve pooling system, was launched in its aftermath, which has since grown to $240 billion and been multilateralised, together with a regional surveillance mechanism, the Economic Review and Policy Dialogue process. Both these initiatives are part of the ASEAN+3 process, as is the Asian Bond Markets Initiative, designed to increase local currency issuance and thereby reduce the currency and maturity mismatches that exacerbated the impacts of the AFC. So far, these initiatives have met with mixed success, but it is early days still. At the very least, they are not doing any harm, and the region is better off for having them than not.

The same cannot be said about developments relating to trade policy.

Asia is a relative late-comer to negotiating so called free trade agreements (FTAs), but the region has been making up for it over the past decade or so. As of September 2012, there were 103 FTAs in effect involving one or more countries from the region, most of them bilateral. There are another 26 signed FTAs, 64 under negotiation and 60 more proposed. Most of the global action on FTAs now involves an Asian country.

If the sheer numbers are mind boggling, add to this the complexity introduced by rules of origin that can vary across FTAs, and just about any item that is up for negotiated liberalisation. This is more than a noodle bowl—it is the mess that is left behind when the noodle bowl crashes to the floor!

Where do we go from here? Left unchecked, the number of FTAs is poised to increase. A speedy and legitimate conclusion to the Doha Round might help, but is this likely? There is renewed discussion of sectoral agreements on trade facilitation and other issues, which may substitute, some argue poorly, for conclusion of the Round. The so-called cherry-picking approach of sectoral agreements seems the likely outcome in breaking the deadlock of overly demanding all-or-nothing ‘single undertakings’.

The current situation with FTAs suggests that Doha alone may not be sufficient, even if concluded comprehensively, and certainly if sliced up into sectoral agreements. Against this backdrop, two key proposals are being put forward to deal with the so-called ‘Asian noodle bowl’: consolidation and multilateralisation. Consolidation proposes the creation of a region-wide FTA to help harmonise bilateral agreements within the region, like with the recently announced Regional Comprehensive Economic Partnership (RCEP) involving the ASEAN+6 countries. Multilateralisation, on the other hand, involves unilateral action, taken either individually or as a group, to grant tariff and other preferences to non-members on a non-discriminatory basis.

With consolidation, it is still unclear if the RCEP will apply to existing agreements, which have been legally ratified, or simply provide a template for future negotiations. If it is the former, there are practical and policy concerns that need to be addressed. First, how can multiple bilateral agreements, each with its own defining rules and characteristics, be folded into one agreement without resorting to the lowest common denominator in order to secure consensus? Second, since the majority of FTAs in the region, including two-thirds of those of the RCEP members, are cross-regional bilateral agreements, it is unclear how these will be addressed. If consolidation is found wanting as a remedy, it also risks adding to the problem. Further, if the consolidated FTA is perceived as being isolating, it may provide fresh impetus for a new wave of market-restoring bilateral FTAs as traditional trade partners outside the region seek to retain trade access with the newly formed bloc. Many Asian countries have applied this approach to Europe and North America, and a new Asian bloc could generate a counter-flow of fresh bilateral FTAs.

If, on the other hand, the RCEP serves as a template for future negotiations, it will not address the existing problem, but only hold out the prospect of not seriously adding to the problem in the future. This is hardly a solution. If the RCEP is only to be a template, then it resembles the Trans-Pacific Partnership (TPP), which shares six members of the RCEP—but, significantly, not China. Yet the agenda of the TPP is even more ambitious than Doha, and may suffer the same fate even with fewer members to contend with. It is difficult to see how countries like Vietnam or Malaysia, for example, will be able to agree to many of the TPP’s accords, such as rules on government procurement. Some critics argue that it is more of a politico-security pact than a trade agreement.

The multilateralisation approach can be pursued either as a follow-on from consolidation, or independently. Consolidation is at best a means, while multilateralisation is the end. The two are not mutually exclusive, but the full gains from consolidation will only be realised when the harmonised accords of the consolidated FTA are multilateralised. Although consolidation requires multilateralisation, the reverse is not true. Countries are free to multilateralise independently, but they must overcome vested interests that stand to lose from the dilution of preferences—usually the same lobbies that pushed for FTAs to begin with.

The desire to secure more reciprocal concessions may stand in the way of multilateralisation. While the benefits from reciprocal liberalisation outweigh unilateral actions, the question is how much longer to hold out for reciprocity from non-FTA partners, while foregoing gains from multilateralisation. Furthermore, low utilisation rates of existing FTAs in Asia also suggest that the expected benefits from the reciprocity route may be greatly overestimated. Therefore, there is little basis for holding off on multilateralisation in order to try and gain reciprocity in a residual set of countries that are not covered by existing FTAs. There is a need, however, to make the case for multilateralisation more strongly, especially when resistance from vested interests can stand in its way. (East Asia Forum)

By Jayant Menon

In 2005 under the auspicious of the ASEAN a new formation, the East Asia Summit emerged encompassing a wider vision of cooperation within Asia, taking in its fold developed, developing and emerging markets and least developed countries. The first Declaration issued in Kuala Lumpur called for the EAS to be an open, inclusive, transparent and outward looking forum. The 18-member EAS, which includes the ten ASEAN and eight other countries including India, meets at the Summit level annually back to back with the ASEAN Summit. The subjects which come up for discussion include energy, environment, climate change and sustainable development, financial cooperation, natural disaster mitigation, education and most importantly a Track-II study on a Comprehensive Economic Partnership in East Asia—CEPEA. The Economic Ministers of the EAS meeting in Bangkok in August 2009 decided to enhance the activity of CEPEA from the so-called Track-II to Track-I. It has been India’s hope that the vision of Asian economic integration, by coalescing the Free Trade Agreements among member countries, into an Asian Regional Trade Agreement, would pave the way for the creation of a broader Asian Economic Community. Prime Minister Dr. Manmohan Singh told the EAS Summit in Bali on November 19, 2011 that there were common challenges facing the countries of the EAS cutting across the national boundaries, and they needed to be met collectively. He said the “resurgence of Asia dependent on the evolution of cooperative architecture in which all countries are equal participant” and assured the members that India “will work with all other countries towards this end”. Besides the membership of the EAS, India’s membership of the ASEAN-centred forums such as ARF, Partnership Summit, the ASEAN Defence Ministers’ Plus Meeting gave India a geopolitically valuable opportunity to have a footprint in the Asia-Pacific.

While the Asian Regional Forum (ARF) promotes constructive dialogue and consultations on political and security issues, the ASEAN Defence Ministers’ Meetings and ASEAN Defence Ministers’ Plus Meetings (ADMM-PLUS) takes in the broader security and defence architecture. It has identified five areas for practical cooperation as a priority, viz., (i) maritime security, (ii) counter terrorism, (iii) Disaster Management, (iv) peace keeping operations, and (v) Military science. India has assured the ADMM-Plus its full cooperation in all the above five areas.

Culture is an important means to bring the peoples off different countries and cultures closer to one another. To promote tourism between India and the ASEAN countries there is a regular interaction between their tourist organisations. As of now there is a greater flow of tourists from India to Southeast Asia. To boost tourist business India and the ASEAN on January 12 2012 entered into an MoU on strengthening cooperation in this area. The car rally held to coincide with the Commemorative Summit is intended to showcase the land connectivity with a view to promoting greater and freer flow of tourists.

Ever since the beginning of the India-ASEAN Summit process in 2002 India has sought greater and larger integration with this region as a whole. New initiatives in the field of people-to-people contacts, space cooperation, capacity building, information and communication technology and media exchange have been initiated as a means to infuse more depth into the relationship. Visitors from most countries of the ASEAN have the facility of visa on arrival in India. In 2010 India hosted a group of 100 students from the ASEAN countries. The Prime Minister told the 9th India-ASEAN Summit in Bali (November 19, 2011) that given the enthusiastic response and positive feedback, New Delhi would increase the number from 100 to 250 students annually. India has established vocational training centres in the ASEAN countries. The Entrepreneurship centres and Centres for English Language Training set up by India in the CLMV (Cambodia, Laos, Myanmar and Vietnam) countries have benefitted the younger generation in these countries and come for all round appreciation. There is a proposal to set up more such centres. Since media plays an important role in fostering relationships, connecting peoples and nations and promoting understanding, the Prime Minister has wished “to institutionalise the Media Exchange Programme” and offered to host two groups of 20 ASEAN journalists each year for three years.

History moves in cycles. If 19th century belonged to Europe, and the 20th was the American century, the 21 is the Asian century. The events of the last decade or so have left no one in doubt of the Asian’s claim to it. The world is converging to the Asia-Pacific region. The United States realised it and has already announced acceptance of the truth as reflected in the reorientations of its security and strategic policies. Asia is geared to this responsibility and ready to meet the challenges of the 21st century.

In the Asian century, India has to prepare itself to face the new challenges if it has to find a niche for itself in Asia in general and Southeast Asia in particular. The challenge particularly comes from China, which is embroiled with some of the ASEAN member states on the question of sovereignty in the South China Sea. While the ASEAN and India have successfully established strategic relations and integrated their economic and social interaction, on the political plane, the expectations of the ASEAN for New Delhi to involve itself generally in the political affairs of the region and in particular in the resolution of the South China Sea issue, present its own challenge. India sincerely believes that the economic and social stakes for all the players including China are far too high, and they will in due course, through peaceful negotiations find solutions to this imbroglio. The ASEAN presents many platforms and channels to resolve any and all problems. Since no country would like to be held responsible for disturbing the delicate fabric of relationships built in recent years in the ASEAN framework, the problem presented by the conflicting claims of the regional powers in the South China Sea will find their solution in a peaceful manner too.

India is not shying away from responsibilities that come with its closer association with the ASEAN and its affiliate bodies. As the Prime Minister said on December 20, 2012 in his opening remarks at the Commemorative Summit that “we see our partnership with ASEAN not merely as a reaffirmation of ties with neighbouring countries or as an instrument of economic development, but also as an integral part of our vision of stable, secure, and prosperous Asia and its surrounding Indian Ocean and Pacific regions”. Next day on December 21 Dr. Manmohan Singh in his closing remarks reiterated India’s commitment to secure the objectives of the new strategic relations. He said: “…in so far as broad lines of cooperation in coming years are concerned, I feel, we should intensify our political, and security consultations in regional forums such as EAS, ARF and the ADMM-Plus. We should work together more purposefully for evolution of an open balanced, and transparent regional architecture. The growing role and responsibilities of ASEAN and India in global affairs also call for increased consultations on broader range of international developments.” Therein lay New Delhi’s commitment to the ASEAN in its search for peace and security along with economic prosperity.

 By A S Bhasin

(The author is a retired IFS Officer)