The ASEAN-India Trade in Goods Agreement (the “Agreement”) is a trade deal between the ten member states of ASEAN and India.
ASEAN and India signed the Agreement at the 7th ASEAN Economic Ministers-India Consultations in Bangkok, Thailand in 2009. The Agreement covers trade in physical goods and products; it does not apply to trade in services. ASEAN and India signed a separate ASEAN-India Trade in Services Agreement in 2014. Along with the ASEAN-India Investment Agreement, the three agreements collectively form the ASEAN-India Free Trade Area.
Once the Agreement came into force in 2010, it established one of the world’s largest free trade areas, covering a combined market of close to 1.8 billion people. Under the Agreement, ASEAN and India have committed to progressively eliminating duties on 76.4 percent of goods and to liberalize tariffs on over 90 percent of goods.
Because of the uneven levels of development and differing economic policies within ASEAN, the Agreement applies two different classes of tariff rates depending on whether or not they are WTO members. Generally speaking, the Agreement grants less developed ASEAN members with less liberalized economies, such as Myanmar and Laos, a longer timeframe to reduce their tariffs.
Tariff reductions on “normal track” products have been completed for Brunei, Indonesia, Malaysia, Singapore, Thailand, the Philippines, and India. The Agreement requires Cambodia, Laos, Myanmar, and Vietnam will have their last “normal track” tariff reductions in place by December 31, 2021.
The Agreement allows the parties to maintain tariffs of four to five percent for some sensitive products. A number of these “sensitive track” products are still in the process of being lowered for Cambodia, Laos, Myanmar, Vietnam, the Philippines, and India. The last tariff reductions for “sensitive track” products are due for Cambodia, Laos, Myanmar, and Vietnam by December 31, 2024.
The main exports by India to the ASEAN region include meat, edible vegetables and fruit, cereals, cotton, tobacco, mineral fuels, salt, sulphur, organic chemicals, pharmaceutical products, iron and steel, copper, electrical and electronic equipment, and machinery. The main imports by India from the ASEAN region include mineral fuels, animal and vegetable fats, chemicals, pharmaceutical products, rubber products, wood products, iron and steel, wearing apparel, electrical and electronic equipment, machinery, ships, boats and floating structures, optical and photographic equipment, and musical instruments. With the implementation of the trade in goods agreement, most of these goods will be granted duty-free entry to the markets of the partner countries in the ASEAN region as well as in India.
Moreover, the Agreement includes unique tariff reduction provisions for India’s “special products”, which are crude and refined palm oil, coffee, black tea, and pepper. By December 31, 2019, tariffs for these products were reduced to 37.5 to 50 percent, depending on the product.
Finally, parties are permitted to place some tariff lines into “highly sensitive lists” to manage tariff reductions for sensitive products, as well as an “exclusion list” for products excluded from the Agreement, which the parties must review annually.
In addition to reducing tariffs, the Agreement calls on all parties to establish predictable, consistent, and transparent trade practices to reduce non-tariff barriers. This includes simplifying customs procedures, ensuring permissible non-tariff measures are transparent, and preventing countries from instituting or maintaining non-tariff measures not in accordance with the WTO.
Other provisions in the Agreement include references to the ASEAN-India DSM Agreement for dispute resolution, exemptions for protecting security interests, and safeguard measures to protect against tariff cuts resulting in such significant import increases that foreign products overwhelm domestic one
Courtesy: www.aseanbriefing.com
