A pan-Asian free trade agreement covering all major Asian economies extending to Australia and New Zealand could be the future of Asia, Indian prime minister Manmohan Singh said yesterday. Addressing the inaugural session of ADB governors, Singh said India’s “Look East” policy signaled a strategic shift towards evolving regional economic cooperation, and it had taken the first steps towards that by signing up free trade agreements with Singapore, Thailand and the South Asian Association for Regional Cooperation (SAARC).
India is working on similar arrangements with ASEAN, Japan, China and South Korea, he said. Indian finance minister P Chidambaram announced yesterday that the agreement with ASEAN will be approved as early as this year, and should pave the way for a pan-Asian trade agreement.
Speaking exclusively to Emerging Markets on the eve of the annual meeting Singh underscored India’s desire for a successful completion of the stalled Doha round of trade talks. “We are deeply committed to multilateralism in world trade. We want the Doha Round to succeed and for it to address the concerns of developing countries,” he said.
These concerns include greater access to markets and a reduction in agricultural subsidies in developed countries but the progress in the negotiations has stalled in recent months and is on the verge of collapse. A key deadline, postponed from December, was missed again last week amid bickering over how many concessions the EU deserves for opening up its food markets. That may well spur efforts aimed at strengthening bilateral ties.
Singh pointed out that India has also set up a study group to pursue greater economic cooperation with China, including taking steps towards a possible free trade agreement. “There are immense untapped opportunities for trade and economic cooperation between our countries,” Singh told Emerging Markets. Despite friction between the two countries over disputed borders, Singh said he believes India must “remain engaged with China” while seeking to resolve differences. “The world is large enough to accommodate the growth aspirations of both India and China,” the prime minister said.
Finance minister P. Chidamabaram yesterday held a bilateral meeting with Jin Renqing, China’s finance minister, on the sidelines of the ADB meeting when they reviewed trade, financial dialogue and investment issues. Asked if India would like to see a further devaluation of China’s yuan, Chidamabaram said that a flexible exchange rate had “served India well” and he believed it was “correct for all countries.”
India is closely watching the move by ASEAN+3 towards introducing an Asian Currency Unit and it “will have a say at the appropriate time.” “Strong economies in the region like Hong Kong and Taiwan are not part of this exercise,” he pointed out.