ASEAN-India Trade in Goods Agreement (AITIGA)
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, which came into effect in 2010, is sometimes referred to as the ASEAN-India Free Trade Agreement.
The Agreement has led to steadily increasing trade between ASEAN and India since its signing.
There was a decline because of the COVID-19 pandemic.
Background:
The Agreement originated out of the Framework Agreement on Comprehensive Economic Cooperation between India and ASEAN created in 2003.
As the title suggests, this framework agreement set the basis for India and ASEAN to negotiate future trade agreements.
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.
Provisions:
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.
The Agreement allows the parties to maintain tariffs of four to five percent for some sensitive products.
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.
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.
Recently in news
India and the ASEAN countries reached an agreement to review their free trade pact for goods and set a 2025 goalpost for concluding the review aimed at addressing the “asymmetry” in bilateral trade.
A Joint Committee of the ASEAN-India Trade in Goods Agreement (AITIGA), deliberated on the roadmap for the review of the pact and finalised the terms of reference for the fresh negotiations, ahead of an ASEAN-India Economic Ministers’ meeting held in Indonesia on Monday.
The AITIGA review will now be taken up at the India-ASEAN Leaders’ Summit scheduled in early September for further guidance.
The review of the AITIGA was a long-standing demand of Indian businesses and the early commencement of the review would help in making trade facilitative and mutually beneficial.
The Ministers agreed to follow a quarterly schedule of negotiations and conclude the review in 2025.
The review of AITIGA is expected to enhance and diversify trade while addressing the current asymmetry in the bilateral trade.
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