India Asean Free Trade Agreement

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INDIAN-ASEAN FREE TRADE AGREEMENT

A

TERM PAPER

SUBMITTED IN PARTIAL FULFILLMENT OF

THE DEGREE OF MASTER OF SOCIAL SCIENCES
(HONOURS SCHOOL)

Supervisor :Submitted by:
Dr. Rajesh KumarKumar Ranjan
M.S.Sc. (Hons.)
2nd Semester
Roll No. 12
[pic]
SCHOOL OF SOCIAL SCIENCES
GURU NANAK DEV UNIVERSITY
AMRITSAR
2009
INTRODUCTION
India and the association of South East Asian Nations (ASEAN) have concluded negotiations for a free trade Agreement (FTA) after years of difficult negotiations. This agreement will be signed into a treaty at India-ASEAN summit to be held in Bangkok on February 26,2009 (Economic times, January 27, 2009) if every thing goes as planned.

Expectation from India ASEAN FTA are high. Joint Media statement of Sixth ASEAM Economic Minister (AEM)-India consultations states that “the AIFTA (ASEAN-India free trade agreement) could be major avenue in harnessing the region’s vast economic potentials towards sustained progress and improved welfare not only for ASEAN and India but for greater East Asian regions as well”.

The India-ASEAN FTA is the result of many international and domestic factors on one hand, the trend of international regionalization and the proliferation of FTA’s and the failure of the Doha round of Multilateral talks to yield concrete results led both India and the ASEAN countries to consider alternative solution towards free trade. On the other hand the adoption policies by India and ASEAN to develop better cooperation with their immediate neighbours in recent years has helped accelerate this negotiation. (www.e_pao.net)

INDIA AND ASEAN: HISTORICAL BACKGROUND
Although India and ASEAN countries have shared cultural and historical ties, India’s interaction with ASEAN countries was quite limited during the cold war as the two pursued policies which were not very conducive to deep rooted interaction. Soon after the end of second world war, India championed the process of decolonization and drew recognition and appreciation from different parts of the world. It become one of the founding members of Non-aligned Movement (NAM). Even though Indonesia was also a member of NAM alongside India, this relationship did not extend beyond that (Sinha, 2007 pg. 357)

The arrival of bipolar politics in southeast Asia, the Vietnam crisis and India’s close ties with the Soviet union led to the adoption of divergent policies by both India and ASEAN. ASEAN was formed in 1967 during the Vietnam war primarily to diffuse regional conflict and to promote better relations between members. Communists victory in Vietnam, Laos and combodia soon worsened the already fragile security situation of southeast Asia. Thus by 1976, ASEAN was forced to contemplate to become an association with security as its main concern. The reunification of veitnam and the Vietnamese invasion of Cambodia created another security dilemma. (Sinha, 2007 pg. 350).

While ASEAN chastised Vietnam, India supported Vietnam. ASEAN’s suspicions of the soviet union and the paronoia it had with anything communist led many including India, to regard ASEAN as allies of the capitalists and pro-American bloc. Suspicions was so high during this time that refused to hold dialogues with ASEAN twice in 1975 and 1980. But with end of the cold war, interactions between India and ASEAN became more frequent: and relations between the two began to improve at very fast pace. Following the end of cold war and collapse of soviet union, India began to adopt liberalization policies.

Mean while, ASEAN has also emerged as an important regional organization with great potential and opportunities for growth. The transformation of the international system and new outlook led to the adoption of the Look East policy in 1991, it marked a strategic shift in its foreign policy and perceptions towards its eastern neighbours. ASEAN’s strategic importance in the larger Asia-Pacific region and the potentials it has in...
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