India, ASEAN agree to review free trade pact in goods

News:India and the 10-member ASEAN nations have agreed to initiate a review of the bilateral free trade agreement(FTA) in goods to make it more user-friendly, simple and trade facilitative.

Facts:

About ASEAN–India Free Trade Area (AIFTA) 

• The ASEAN–India Free Trade Area (AIFTA) is a free trade area among the ten member states of the Association of Southeast Asian Nations (ASEAN) and India.
• The free trade agreement came into force from January 2010.
• Under the pact, two trading partners set timelines for eliminating duties on the maximum number of goods traded between the two regions.

Why review is needed?

• India-ASEAN trade deficit has widened significantly since the pact was implemented.
• A NITI Aayog study reveals that India’s trade deficit with ASEAN doubled to $10 billion in 2017 from $5 billion in 2011.
• One of the reasons for the growing deficit is the low utilisation of the FTA route by Indian exporters to ASEAN countries because of difficulties faced in negotiating the rules.

Additional information 

What are Free Trade Agreements?

• FTAs are arrangements between two or more countries or trading blocs that primarily agree to reduce or eliminate customs tariff and non tariff barriers on substantial trade between them but capital or labor may not move freely.
• FTAs normally cover trade in goods (such as agricultural or industrial products) or trade in services (such as banking, construction, trading etc).
• FTAs can also cover other areas such as intellectual property rights (IPRs),investment, government procurement and competition policy etc.