This article has been written by Mr. Srivatsan Ananth, a 2nd year student of IFIM Law School, Bengaluru.
Abstract:
Intellectual property, in simple words, refers to creations of the mind. IPR is a tool of protection, used to protect the creators who have invested their time, money, and energy on their creations. IPR, Intellectual Property Rights, are the exclusive rights given to people over their creations or inventions, of their own minds. The person who creates the subject matter has the right over the use of his or her invention for a definite period.
Free trade is a policy of trade which puts no restriction on imports and exports. A free trade agreement (FTA) helps in establishing a free trade policy. It is a treaty to reduce or eliminate certain barriers to trade and investment. And, to facilitate stronger trade and commercial ties between the countries involved in the agreement. This article provides an overview of the ASEAN-India Free Trade Agreement and India’s compliance with it.
Introduction:
Free trade s a policy by which a government does not discriminate against imports and does not interfere with exports by applying tariffs or subsidies. The goods and services are bought and sold across international borders with little or no government tariffs, subsidies, or prohibition to hinder the exchange. The concept of ‘Free Trade’ is based on the theory of Laissez-faire. The French phrase means “allow to do”. It is an 18th century Economic theory which means, the government shall not discriminate against imports or interfere with exports by applying tariffs or subsidies. The exchange or transaction is basically free from any economic intervention.
FTAs (Free Trade Agreement) are treaties between two or more countries formulated to reduce or eliminate certain barriers in relation to trade and investment. It is also to facilitate stronger trade and commercial ties between parties involved. However, a free trade policy does not necessarily imply that a country ends its control and taxation of imports and exports. India has signed 13 regional free trade agreements until 2023. The reason was simple, the trade agreements seek to promote India’s trade with other countries by lowering tariffs and gaining access to the new markets.
Benefits of a Free Trade Agreement:
A free trade agreement contributes to a greater economic activity. Reduction and elimination in tariffs is not the only aim of free trade agreement. It also helps in addressing the hinderances that impede the free flow of goods and services. An FTA also increases the possibility of investments and finally, it improves the rules, laws and regulations affecting such issues as intellectual property, e-commerce and government procurement.
In general, a free trade agreement made between one nation with another gives the businesses and the consumers improved access to a wider range of competitively priced goods and services, new technologies and innovative practices.
Free trade agreements can deliver enhanced trade and investment opportunities that contribute to the economic growth of less-developed economies.
ASEAN-India Free Trade Agreement:
The Association of South-East Asian Nations (ASEAN) comprises of Indonesia, Singapore, Philippines, Malaysia, Brunei, Thailand, Cambodia, Lao PDR, Myanmar and Vietnam. India’s focus on a strengthened and multi-faceted relationship with ASEAN is an outcome of the significant changes in the world’s political and economic scenario since the early 1990s and India’s own march towards economic liberalisation. India’s relationship with ASEAN is a key pillar of our foreign policy and the foundation of our Act East Policy. The Leaders signed the ASEAN-India Framework Agreement on Comprehensive Economic Cooperation. At the 2nd ASEAN-India Summit in 2003, the Leaders signed the ASEAN- India Framework Agreement on Comprehensive Economic Cooperation. The Framework Agreement laid a sound basis for the establishment of an ASEAN-India Free Trade Area (FTA), which includes FTA in goods, services and investment.
The ASEAN–India Free Trade Area (AIFTA) is a free trade area among the ten member states of the Association of Southeast Asian Nations (ASEAN) and Indian Republic. The signing of the ASEAN-India Trade in Goods Agreement paves the way for the creation of one of the world’s largest FTAs. The ASEAN-India FTA will see tariff liberalisation of over 90 percent of products traded between the two dynamic regions, including the so-called “special products,” such as palm oil (crude and refined), coffee, black tea and pepper.
Since AIFTA was signed, bilateral trade between these members has been positively impacted. Through the AIFTA, both India and ASEAN have agreed to progressively eliminate tariffs on 80 percent of the tariff lines. The reduction in tariffs through AIFTA and the various regional developments between these regions have led to considerable growth in trade between these two regions. There has been a sharp increase in India’s trade with the ASEAN region after the signing of the FTA. While India’s total trade has increased by almost 19 times in the past three decades, its imports have increased at a much higher pace than their exports, leading to an ever-increasing trade deficit. While tariffs between ASEAN and India have reduced through FTA’s, on the contrary, the rise in NTMs has also been phenomenal. According, to an extensive report published by the ASEAN-India Centre (AIC) at RIS in 2019 found that, despite better market access due to various trade liberalization and trade agreements between these two regions, the complexities and the applications of Non-tariff Measures (NTMs) have consistently been.
There have been a few key agreements that have been linked to this boost in India – ASEAN trade relations. Trade and Investment are considered to be areas of priority when it comes to economic cooperation between ASEAN and India. The ASEAN _ India Trade in Goods Agreement (AITIGA) was implemented in January 2010. In accordance with the agreement, ASEAN member states and India have agreed to open their respective markets by progressively reducing and eliminating duties on 76.4 percent of goods and liberalising tariffs on over 90 percent of goods. Since AITIGA was put into effect, merchandise trade between ASEAN and India has increased significantly, with increase in exports by 23 per cent and imports by. 55 per cent over the past decade. Imports have increased particularly from Cambodia, Singapore and Vietnam.
India signed the India-Malaysia Comprehensive Economic Cooperation Agreement (MICECA). It was signed in 2011. The agreement includes concessions and reductions in tariff for certain goods, services and investments. The Covid-19 pandemic did not affect the bilateral trade. India and Thailand implemented Early Harvest Scheme (EHS). It was signed in 2006. It was signed to identify specific products for tariff reduction, which was discussed during the ongoing negotiations of the India-Thailand Free Trade Agreement.
Conclusion:
While there are many benefits to the ASEAN-India FTA, there is concern in India that the agreement will have several negative impacts on the economy. As previously stated, the two regions aim to reduce their tariffs on a majority of their traded goods. This will allow them to increase the market access of their products. It is criticised, however, that India will not experience as great an increase in market access to ASEAN countries as ASEAN will in India. It is feared that a gradual liberalisation of tariffs and a rise in imported goods into India will threaten several sectors of the economy, specifically the plantation sector, some manufacturing industries, and the marine products industry. The cheap imports of rubber, coffee, and fish would lower domestic production, adversely affecting farmers and ultimately its economy.
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