But hopes of more access under Mode 4 are fading.
The much-awaited pact on trade in services and investment between India and the Association of Southeast Asian Nations (Asean) has made “some progress towards conclusion” during the last round of negotiations that took place here last week, even as New Delhi’s hope of getting more market access for its professionals seems futile.
India and the 10-member trading bloc already have a goods agreement in place after it came into force from January last year, providing tariff-free access to a range of product lines such as textiles, pharmaceuticals, chemicals, engineering products, processed food and auto parts.
However, the deal in services trade and investment had been going on since it started formally in October 2009. Under that, India has mainly demanded greater job opportunities for its professionals in the Asean markets of Singapore, Malaysia, Indonesia, Vietnam, Thailand, Philippines, Cambodia, Laos, Brunei and Myanmar.
“Hopefully, by the early part of 2012, we might be able to wrap up the talks. But getting more under Mode 4 is out of question, even though we do have hopes to get more under Mode 3 and Mode 1,” according to a senior commerce department official involved in the talks. “So, there has been some working progress this time. The level of ambition can be seen amongst all the countries. It has been agreed unanimously to nudge Philippines from its position, which had been reluctant since beginning. Of course, huge levels of ambitions cannot be expected,” he told Business Standard.
Under trade parlance, trade in services is divided into four broad categories. Mode 1 refers to cross-border supply of services through electronic means. Mode 2 refers to a situation where the consumer of a service moves into another partner country. Mode 3 implies that a particular service provider established presence in form of joint venture in another country. Mode 4 is the movement of professionals to other country to provide service such as doctors, accountants and engineers.
“Bilaterally, with Thailand and Indonesia, India will be able to get more access under Mode 4 but under Asean it is not possible because of the inherent nature of the block,” the official said. “Within Asean, they do not want to give each other more than what has already been offered, which is the main problem.”
India and the Asean countries had earlier decided to have a broad-based comprehensive economic partnership agreement encompassing trade in goods, services and investment. However, the goods deal was agreed and signed upon last year.
This would result in doing away with at least 80 per cent of import tariffs in a phased manner between 2013 and 2016. The tariffs on sensitive products would also be slashed by five per cent by 2016.
This deal would also help India in reducing its dependence on China as it will be able to access the vast and thriving markets of all the 10 Asean countries. The total trade between India and the 1967-formed bloc increased by 24 per cent in 2010 reaching $51.3 billion.
India’s exports grew at 33 per cent to $23.1 billion while imports from Asean increased by 18 per cent to $28.2 billion. Both sides have set the objective of increasing bilateral trade to $70 billion by 2012.
