Asean is pressurising India to sign a liberalised pact in goods and services along with six East Asian economies, as the bloc looks for an ally to counterbalance the growing strength of China.
India is currently delaying and reportedly demanding a balanced and mutually beneficial agreement.
The Regional Comprehensive Economic Partnership (RCEP), under negotiation for the last few years, aims to create an integrated market comprising nearly half the world’s population and one-third of its GDP.
Differences between India and Asean were apparent at a New Delhi summit last week although the relationship seems to be heading in the direction of deeper ties.
India fears exposing its domestic markets to cheap, duty-free Chinese goods, crushing Indian manufacturers. New Delhi is still marked by centuries of colonial subjugation, when its manufacturing was stamped out by uneven trade deals and cheap European imports.
More recent history probably echos loudest in Indian ears. The humiliation of the 1962 border war with China still casts a shadow on the Indian psyche and New Delhi is wary of Sino expansion into the Indian Ocean and keen to find strategic allies to the east.
The South China Sea dispute concentrates minds in many Asean capitals and in Washington and Taipei. India, however, is largely focussed on Beijing’s expanding network of fast railways through Laos, Thailand and its pipelines and joint naval operations in Myanmar that could bring the Indian Ocean into its sphere of influence.
But if India is looking for military allies, Asean might well disappoint. The bloc’s record of military cooperation is woeful, as can be seen by the inability of the Philippines, Malaysia and Indonesia to work together to crush the stronghold Isis and groups like Abu Sayyaf have built in their jungles.
Singaporean Prime Minister Lee Hsien Loong, the world leader with the highest official wage of around US$1.7 million, said: “This [RCEP] pact represents a historic opportunity to establish the world’s largest trading bloc, enabling our businesses to harness the region’s true potential.”
Some Asean members see India as a major potential trading partner, capable of counterbalancing China’s rising assertiveness.
Meanwhile, Indian Prime Minister Narendra Modi reportedly expresses hopes for a balanced outcome, mutually beneficial to all signatories.
The Modi administration hopes to expand trade and investment relations with the 10 states east of Assam with the hope of creating a common market within 10 years.
Asean has a combined population of 644 million and a GDP of US$2.7 trillion. When India is added, the 11 states have a US$5 trillion economy, the third largest in the world after the US and China.
Trade between India and Asean rose to US$71.6 billion in 2016-17 from US$65.1 billion in 2015-16. This is dwarfed by Asean’s trade with China, which was measured at US$452.31 billion in 2016. China’s exports to Asean were worth US$256 billion, according to the Confederation of Indian Industry.
Indo-Asean relations are still in their infancy, in many ways, as joint naval exercises and boosting bilateral investment deals were not apparently discussed at the summit.
On the sidelines, the Philippines and India discussed US$1.25 billion worth of bilateral investment pledges, largely in the area of energy, transport, pharmaceuticals and information technology, which are projected to create up to 10,000 jobs.
Maritime security was prominent in the joint India-Asean statement or “Delhi Declaration”. Both sides reaffirmed their commitment to “maintaining and promoting peace, stability, maritime safety and security, freedom of navigation and overflight in the region, and other lawful uses of the seas”.
The statement mentioned the necessity of protecting “unimpeded lawful maritime commerce” and to “promote peaceful resolutions of disputes” in accordance to international law.
The declaration also called for “full and effective implementation of the Declaration on the Conduct of the Parties in the South China Sea” as well as “early conclusion of the Code of Conduct in the South China Sea”.
The addition of India to the summit has clearly changed Asean dynamics. All previous attempts to establish an Asean position on the South China Sea have been vetoed by Beijing’s allies in Cambodia, which has no stake in the dispute but is increasingly beholden to China.
The bulk of India’s trade and energy passes through the South China Sea and it has signed major energy investment deals, particularly with Vietnam.
India is reportedly looking for Asean to open up its services sector and provide work visas for skilled Indians as a trade-off with Asean. “Since the RCEP covers goods, investment and services, we need a satisfactory outcome on services too,” an Indian government source was quoted saying.
India offers an opportunity for Asean to counterbalance the increasing power of China but it will remain an unfair fight for the foreseeable future. India’s ethnic and religious divisions, vast poverty, feeble infrastructure and weak government make it no match for well-organised China.
Indian naval yoga and physical training. Picture credit: Wikimedia
