About ASEAN

What is ASEAN?

What is Asean agreement?

What are the advantages and aisadvantages of Asean agreement?

What are the merits and demerits of Asean agreemet?

A lot of questions and doubts are there with the new Asean agreement between India and Asean. The main sad thing is that, most of the people in the country and especially in Kerala didn’t know what exactly it is and what are the different sides of this Asean agreement.

The Association of Southeast Asian Nations (ASEAN) is a group of ten Southeast Asian countries. It was formed on 8th august 1967. The 10 countries in ASEAN are Indonesia, Malaysia, Philippines, Singapore, Brunei, Burma (Myanmar), Cambodia, Laos, Vietnam and Thailand.

This is the time of globalization to reduce expense. The members of ASEAN can have free trade between the member countries. It will give a huge amount of profit to the countries from taxation. The ASEAN agreement will help the economic, social and structural growth of its members. The gainful cooperation is the main advantage of ASEAN agreement. By signing the ASEAN agreement India can import the goods from very cheaply. It will help to bring down the costs of all the electronic goods imported from the member countries.

The ASEAN agreement in all the ways is good for India since India does not have to import food items and has only artificial products to import. Since India is self reliant of food items it does not have to import any of the food. So, it will not affect the agriculturists of India. And India can make a great profit from the free trade of electronic and automobile imports.

China’s trade share with the newer ASEAN members in terms of imports has given great advantages to the newer members. China and Vietnam are important trade partners both in terms of size and the rate of merchandise trade. The difference is a huge one as it is US$0.7 billion in 1995 to over US$2.9 billion in 2000. This makes clear how much of profit will a member get by signing into the ASEAN agreement.

The other advantage is for tourism as India and all the ASEAN nations can expect more of tourist from the member countries. India being one of the best tourist places can make a good profit from tourism. It will give a good income to those who live on tourism. There is a chance for direct investment from several ASEAN members.

The attractions of the ASEAN agreement for India are strengthening and enhancing economic, trade and investment co-operation between the Parties; progressively liberalizing and promoting trade in goods and services as well as creating a transparent, liberal and facilitative investment regime; exploring new areas and developing appropriate measures for closer economic co-operation between the Parties; and facilitating the more effective economic integration of the new ASEAN Member States and bridging the development gap among the Parties.

The agreement allows for the decline of tariffs on so-called highly sensitive items, and special products including palm oil, pepper, coffee and black tea by 2019. Tariff rates on sensitive items with the five ASEAN member states most significant to India’s trade system will be reduced gradually until the year 2016.

The tax rates on Normal Track 1 items will be reduced, and lastly eliminated, by 2013, and by 2016 for Normal Track 2 items. Other countries in ASEAN like Myanmar receive three to five years longer to realize the same tariff goals.

India had initially proposed to include 854 tariff lines in the sensitive catalog of items (not subjected to tariff reduction); the country has now reduced the number to 560. The remaining 294 items would carry on enjoying tariff protection for the first five years following which tariffs would be gradually reduced. The 560 items in the sensitive list include agricultural products, chemicals and petrochemicals, tobacco, alcohol and textile. The four agriculture items of primary interest to Asean countries including palm oil, pepper and tea, have, as promised, been kept out of the sensitive list.

For the betterment of India, she has contracted to reduce duties on the products after five years. India has agreed to reduce duties on crude palm oil to 50%, developed palm oil to 60% and pepper and tea to 50% over an epoch of 10 years. For the 290 remaining items which would be insulated from tax cuts for the first five years, tariffs would be slowly reduced to 7.5% by 2022.

The catalog includes chemicals & pesticides, rubber products, leather products, foot-wear, textile products, sewing machines and electrical parts. Tax elimination would be carried out on two tracks. The duty on items falling under normal track-1 will be eliminated by 2011 and duties on items falling under normal track-2 will be eliminated by 2015. The future of the India-Asean CECA now depends on how Asean reacts to India’s proposal.

In view of Malaysia, India’s informal offer made last month to reduce duties on palm oil was not sufficient. The Asean nations have submitted a sensitive list of 600 products to India. The India-Asean free trade agreement, which is supposed to be operational from January 1, 2007, had hit a roadblock when Asean had suspended the discussion expressing displeasure over India’s sensitive list including 854 products.

In short as every projects of the world the Asean treaty may also have a few demerits from some points of view. But there may be some better possibilities from the other sides which will add to the growth of the country.