Blitz Bureau
FOR anyone dealing with commerce and free trade, being smart and sassy is a must. But one must, hand in hand with that, have the ability to be diplomatic. Commerce Minister Piyush Goyal was uncharacteristically indiscreet in comments with reference to the country’s Free Trade Agreements (FTAs) with the Association of South East Asian Nations (ASEAN).
“Many of whom (developing countries with which India entered into FTAs) have now become the B team of China. So effectively, I have opened up my markets for goods that find their way from China into India,” he said at the Future Frontiers Forum in London some two weeks back. In fact, he went so far as to describe some of the agreements as ‘’silly’’ stating that ‘’if I do an ASEAN agreement with Indonesia, Malaysia, Thailand, Vietnam, Cambodia, Laos, it really is silly, because I’m opening up my market to my competitors.”
The Asian tigers
For the record, the ASEAN-India Trade in Goods Agreement (AITIGA) was operationalised in 2010, in the second year of the UPA-II Government. At the time, India’s nominal GDP was 1.65 trillion, and the ASEAN countries (which include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) were viewed as the Asian Tigers.
According to The Financial Express, “Since then, India’s trade deficit with ASEAN widened from $4.98 billion in 2010-11, the first full year of operation of AITIGA, to $44.20 billion in 2024-25. India’s exports to the region fell 5.77 per cent on-year in 2024-25 to $38.96 billion while imports grew 5.65 per cent to $84.16 billion.”
Goyal was no-holds-barred at the London event, alleging that the ASEAN group was being systematically used to funnel Chinese goods to India by overlooking the rules of origin. “The bloc had become the B-team of China,” the minister said. He was echoing the fears expressed repeatedly by many trade associations that China was exploiting the AIFTA framework to send its goods through ASEAN countries.
Review stonewalled
The problem is that India has repeatedly asked for a review of the agreement, and nine rounds of negotiations have taken place since 2022 with no result in sight. In fact, both the Commerce Ministry and the External Affairs Ministry believe that there is an attempt to stonewall the talks, one reason why the minister was so undiplomatic.
As the Times of India reported, “In 2019, ASEAN agreed to the review after much pushing by India, but then did not commence negotiations for almost two years. Indian authorities argued that China worked out arrangements through companies and affiliates, which allowed it to route subsidised goods through one of the countries that make up the trading bloc.” Goyal’s push is to ensure that the review of the AITIGA is completed by the end of this year, as agreed upon.
Although there is no formal statement from the ASEAN Block, expressing any displeasure on Goyal’s comments, the Economic Times reported that “at a scheduled India-ASEAN meeting held in Kuala Lumpur, the Malaysian cochair put out a strongly worded message in response to the Indian Minister’s comments, ET has learnt. The occasion was ASEAN-India Trade in Goods Agreement review.”
Sanguine argument
The group’s argument is sanguine: why blame us when you have such a huge bilateral trade with China that is anyway tilted in China’s favour? What they forget to mention is that China uses the ASEAN route to dump valueadded goods into India at FTA rates that would be impossible through the bilateral route.
What is clear from the powwow is that India is no more willing to be shackled by an FTA that doesn’t produce a winwin for both parties. It is evident that patience is wearing thin, and diplomacy has not produced the desired results. Is the answer to all that is a bout of tough ‘undiplomatic’ talk? Time will tell.
