India’s FTA And CECA With ASEAN


ASEAN: The Association of Southeast Asian Nations is a geo-political and economic organisation of ten countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam. Its aims include accelerating economic growth, social progress, cultural development among its members, protection of regional peace and stability, and opportunities for member countries to discuss differences peacefully.

     India's FTA


⇒ Cabinet recently approved Free Trade Agreement India’s  (FTA) with ASEAN group.

⇒ This particular pact was signed in Bali at the time of Ninth World Trade Organization (WTO) Ministerial Conference.


⇒ Free trade is a policy by which governments do not discriminate against imports or exports

⇒ Most governments still impose some protectionist policies that are intended to support local employment, such as applying tariffs to imports or subsidies to exports. Governments may also restrict free trade to limit exports of natural resources. Other barriers that may hinder trade include import quotas, taxes, and non-tariff barriers, such as regulatory legislation.

⇒ Pure form of free trade is not observed anywhere in the world.

⇒ There are two types of barriers that exist:

1. Tariff Barriers: A “tax” on imports that are invoked by countries mainly to protect the domestic industries from the possible consequences of greater competition

2. Non-tariff barriers: These can be in form of quantitative restrictions on imports/exports (“quotas”) or existing government regulations governing technical and safety standards for products that can have the effect of restricting imports. Another form of non-tariff barrier to free trade is found in “Domestic Content Requirements” that are regulations wherein importers are forced to import goods that contain minimum prescribed amounts of domestically produced components. Such restrictions are commonly imposed on the domestic operations of foreign firms that engage in foreign direct investment in production facilities in the regulating country.


⇒ The trade liberalization often occurs in the form of a multilateral agreement such as the various trade negotiation rounds of the General Agreement on Tariffs and Trade (“GATT”), or an agreement among a smaller set of countries , typically with some geographical proximity.

⇒ Agreement with a small set of countries is called as “Preferential Trade Agreement” (PTA).


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