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An ASEAN-India standoff

P.S. Suryanarayana

The stalemate in the trade negotiations is a test of the political will on both sides for cooperation on all fronts.

INDIA'S INCREASINGLY proactive engagement with the Association of South East Asian Nations (ASEAN) has suddenly hit a pocket of turbulence. Prime Minister Manmohan Singh's participation in the first-ever ASEAN-organised East Asia Summit last December marked a new high in India's `Look East policy' first propounded by P.V. Narasimha Rao in the early 1990s. However, the latest impasse in ASEAN's trade negotiations with India signifies not only some hard bargaining on economic issues but also a new challenge to the shared political will on both sides.

Surely, this perception does not magnify the negative factors behind the scenes. But it cannot also be wished away on the premise that the troubled talks do not threaten, at this stage, the long-term process of East Asian integration. While ASEAN has to ensure for each of its 10 members an equitable trade advantage, India's task is how best to meet the expectations of not just a collective entity but each of its members as well.

In a sense, there is nothing unique about such dilemmas in parleys between a state and a group of nations. Significant, though, is India's sense of frustration at not knowing how far ASEAN shares the "maximal" positions of some of its key member-states, Malaysia and Indonesia in particular. This aspect of interactions on the inside track of dialogue is traceable to the sequence of events as it occurred recently.

An ASEAN-India official-level meeting in late July was, on the whole, regarded by the two sides as an exercise that seemed to have averted a possible crisis. Yet, at the political level, Malaysia, which co-chairs the Trade Negotiating Committee in regard to goods as different from services, lost no time in indicating the possibility of a "suspension" of these talks.

Manmohan's initiative

It was at that stage that Dr. Manmohan Singh decided to seize the initiative and write to his Malaysian counterpart, Abdullah Ahmad Badawi. The objective was to reaffirm India's commitment to carry forward the troubled negotiations. And, it was indicated to Malaysia that India would appreciate if Mr. Abdullah could receive Commerce Minister Kamal Nath as a special envoy. The plan was that he would deliver Dr. Singh's letter and explore the way forward.

Sensitive meetings are not easy to organise quickly, and India's High Commissioner to Malaysia, R.L. Narayan, has, therefore, cautioned against "reading diplomatic meaning into any delay" in this regard.

And, in a larger ambience, the technical details and the political vision go beyond the niceties of whether or not Dr. Singh's letter to Mr. Abdullah is being delivered by a special envoy or through diplomatic channels.

On the technical side, the current India-ASEAN talks mark only a start-up in the process aimed at fashioning comprehensive economic cooperation. The planned total package, for which the two signed just a `framework agreement' in 2003, covers not only the conventionally important commerce in goods but also trade-in-services, multi-path investments, and exchanges on new ideas.

It was felt that New Delhi's Comprehensive Economic Cooperation Agreement (CECA) with Singapore, already implemented for over a year now, could serve as a "template" for the ASEAN-India process. India accordingly offered ASEAN, before the latest setback, a tariff regime, ranging from a sub-category of zero duties to classifications about phased duty reductions and protected items. The norm was that each state among India's ASEAN partners would derive tariff incentives on only those home-made products and re-export items that could show a value-addition of at least 35 per cent. This was more liberal than the 40 per cent stipulated in the CECA.

However, Malaysia and Indonesia, which now support each other over their trade differences with India, voiced objections to its stand on two different tracks for sensitive items — those that would remain out of bounds for tariff concessions and the others that could be considered later. India agreed to reduce the number of sensitive products. But the question remains unsettled. On a different but equally important matter, neither Malaysia nor Indonesia was pleased with its own range of goods that would qualify for duty sops. And now, India, having placed a firm offer on the table, is awaiting a response. The assumption is that the talks will not be suspended, after all.

On the political front, East Asians tend to see India's vision about engaging ASEAN in larger terms and against the other context of China's proactive diplomacy towards Southeast Asia. Relevant to this big picture is the assessment by Hu Shisheng, a specialist on New Delhi's foreign affairs, that "India hopes, through her `Look East' policy, to balance China and to ease the geographic and psychological pressure brought about by the close China-ASEAN relations." This aspect of India's policy is now being put to the test by some ASEAN members.

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