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PH to Join Indo-ASEAN FTA

by: Ronald Escanlar

Thursday, March 17, 2011 | Outsourcing News |

The Philippines is about to ratify this month the free trade agreement (FTA) between India and the Association of South East Asian Nations (ASEAN). The FTA, signed in 2009, will lift the tariff on 4,000 items – in effect making the Indo-ASEAN FTA one of the world’s biggest free trade areas.

According to Gregory Domingo, the country’s trade and industry secretary, “We need to do it when the Congress is not in session. All internal processes are complete, and only the President has to sign it. I am hopeful that it will happen by the end of this month.” The Philippine Congress will be adjourning their session this March 25.

Ongoing negotiations for a parallel agreement on services and investment

Negotiations are also ongoing for a parallel agreement on services and investment. At present, trade in the services sector between India and ASEAN countries (Cambodia, Brunei, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) stands at $50.34 billion. An FTA could boost this trade to around $70 billion by next year.

Indian commerce and industry Minister Anand Sharma said they expect an agreement on services and investments by the end of the year, expanding the current FTA to a Comprehensive Economic Partnership Agreement. Domingo, on the other hand, said there were still issues. “We are going to try and complete negotiations for the services and investment agreement, and we are already trying to resolve the issues. There is a possibility (of meeting the timeline) but it may be difficult.”

The Philippines, at first, was wary of the domestic effects of a services agreement. However, Domingo explained that better bilateral relations, especially in the services sector, could improve existing economic relationships, considering that major Indian IT companies, such as Tata Consultancy Services, Infosys, Wipro, and Aditya Birla Minacs, have already set up offices in the country.

“Our linkage with India hasn’t been that strong and, across the board, trade and investment is under-represented. We need to purse this issue more vigorously. But in the BPO and call-centre sectors, a lot of large Indian players are in the Philippines. This is the first step and we are starting to build it up from there,” Domingo explained.


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