Asian economic community
months ago, the outgoing director general of the WTO, Dr Supachai
Panitchpakdi told some journalists visiting his office at Geneva
that there was a real threat today of regional trade arrangements
(RTAs) overtaking the tedious multilateral negotiations under the
WTO. After all, the number of RTAs signed in the last 10 years is
many times more than those signed since GATT came into being several
decades ago. Supachai also warned that too much energy spent by
nations on signing RTAs could slow down the progress at the WTO,
though he concedes that RTAs done in a calibrated way could act
as building blocks for the multilateral framework.
the subtle point he had tried to press home was that the larger
focus must be on the WTO. But is this happening? Certainly not,
from what one can discern on the ground. On the contrary, there
is a lot of anxiety in the developed world that Asia, buttressed
by markets such as China and India, might be emerging as a big free
trade block by itself.
anxiety was reflected in the recent visit to India by British Prime
Minister Tony Blair, who led an EU team to India in his capacity
as the current president of the EU. The British trade minister was
particularly concerned that the EU in general and Britain in particular
was at a big disadvantage on account of the comprehensive economic
cooperation agreement signed between India and Singapore. He was
particularly concerned that Singapore banks will now have a far
greater access to the Indian market than the European banks. The
Singapore agreement encompasses trade in goods and services, besides
giving pre-establishment investment guarantee to Singapore firms.
Obviously the EU wants all of this for itself.
is the EU willing to give India what Singapore has accorded —
recognising 127 Indian professional degrees ranging from engineering
to architecture and bio-chemistry? Indian professionals in 127 vocations
will now get temporary work visas to provide services in Singapore.
Obviously, neither the EU nor the US can make such a bold offer
as Singapore has done. Even at the WTO, India’s core position
is that it is willing to fully open up its services sector —
financial, retail, telecom, etc — if the EU and US allow greater
scope for skilled Indians to provide temporary service in their
country. The EU and US are not ready for this. Unfortunately, the
larger success of the multilateral framework hinges largely on this.
is where the real import of the Singapore agreement lies: something
that could not happen multilaterally is succeeding in a regional
trade arrangement. This is exactly what Dr Supachai had meant when
he said the RTAs might overtake the WTO. Singapore is just the beginning.
Dr Manmohan Singh has already instructed that a Singapore-type agreement
covering goods and services must be signed with all the Asean countries.
In internal meetings, the PM has asked these agreements to be fast-tracked
so that India gets the benefit of integration with the Asean block
to begin with.
Singapore Prime Minister, Mr Lee Hsien-Loong, during his recent
India visit told this writer that he could visualise a larger open
trade block emerging in Asia. He said China and India would act
as catalysts around which a larger trade bloc would intermesh together.
In some sense, this is already happening with both China and India
separately hooking into the Asean. This process, though nascent
now, must worry both the EU and US.
today, statistics show that India’s trade with the EU grouping
is 19% of its total merchandise trade and the share of North America
is 13%. But interestingly the share of Asean plus China, Japan and
South Korea in India’s total trade is 20%. This will gallop
further if a larger open trade bloc emerges in this region with
China and India as the main drivers. In fact, such a community has
already been mooted by China, Japan and the Asean countries. The
Chinese ambassador in New Delhi, Mr Sun Yuxi, told this newspaper
that India would be invited to an East Asian Summit later this year
to discuss the broad contours of a larger Asian economic community.
will even talk about the possibility of an Asian currency”,
he said. The grand idea is to move in the direction of an EU-type
economic arrangement in the long run. Mr Sun recognises that Asian
nations have very diverse histories and cultures which will need
to be overcome over time.
what can be achieved in a relatively short period is a freer trade
and investment regime promoted by the larger Asian community. Mr
Sun also believes that Asian economies can discuss a common financial
architecture which will help deal with financial crises of the kind
that visited East Asia in 1997. While all these are nascent thoughts,
it appears there are many big ideas in the larger Asian region whose
time may have come.
from The Economic Times, 20 September 2005)