Commerce and Industry Minister Anand Sharma attended 42nd India-ASEAN (Association of South East Asian Nations) Economic Ministers Meet at the beach resort city of Da Nang in Vietnam. The minister discussed the progress made in implementing the trade in goods agreement and proposed trade pact in services and investments. While talking to PTI, he also mentioned about his unscheduled meeting with Chinese Commerce Minister Chen Deming.

Excerpts:

You had an unscheduled meeting with Chinese commerce minister Chen Deming. Trade deficit between India and China is huge. Do you think a Free Trade Agreement with China will help bridge that?
The kind of trade deficit which we have with China is untenable and unsustainable. I have been frank in conveying this to my Chinese counterpart Chen Deming when we had the joint economic group meeting in Beijing. I even had the opportunity to call on PM Wen Jiabao. I understand that it has registered well with the Chinese leadership at the highest level that India has serious concerns about trade imbalance, which is unsustainable. Therefore, we have asked them to identify sectors where India can have more access in China. China has a huge pharmaceutical programme (procurement of pharmaceutical). We want Indian companies to get access and opportunities to participate in government contracts. Similarly, we have asked for government contracts for Indian IT companies and China has enough space for the same. I have been assured that this will happen because as the two economies grow, they will have huge competitive strength along with complementarities. We need to judiciously look at that.

Will the appreciation of Chinese currency help in bridging India-China trade gap?
No, I don’t think so. There is a question of market access; it is a question of balanced trade. But there should not be any non-tariff barriers, particularly with regard to the Indian generics, machinery and the IT sector.

Why is there a delay in signing India-Asean pact in goods and services?
Some members have higher levels of ambitions; the smaller countries understandably do not have the same. We are proceeding on certain principles, that is, one offer which India would take against 10 offers. The individual country offer, which Asean member states would make, is not the only area… it is in Mode-I, Mode-III and mode 4. Mode-IV is primarily the movement of natural persons, where they could be of interest to India. It also has similar interests with countries like Malaysia or Indonesia.  The next round is going to commence in a weeks time and then again in September. Hopefully by the next India-Asean Summit in October, the ministers will meet on the margins to have a review. We are optimistic that in the next few months the gap would be closed and an agreement on investments and services will be reached. The pace of negotiations have gathered momentum, there is a greater degree of clarity even if there are issues on which different perceptions are there…In this ministerial I have been informed yesterday and today that Indonesia has completed all its processes and the notification will be issued. Cambodia has also said they have completed the processes and they will issue a notification within a week. So that would take the number to six.

Can we expect that by the end of this fiscal, all the 10 members will operationalise the pact in goods and also sign the agreement in services and investments?
As far as services agreement, if we make the desired progress, which we hope to, in the next ministerial we will have a very clear view. The contentious issues or areas have been identified. Both the sides have agreed that we will address them fairly and quickly. We will have India-Asean business summit in New Delhi in March 2011 and we will also have an India-Asean business fare. I am sure that by that time, this agreement would have been put in place and this will give yet another thrust. Look at the last one year, we signed the Comprehensive Economic Partnership Agreement (CEPA) with Korea followed by Asean. We are fast tracking our CEPA negotiations with Japan and also with Malaysia. Going forward, we will be having negotiations with Indonesia and Thailand… I have discussed this in my bilateral meetings this time. With Singapore, which is our largest trading partner in Asean, we already launched the second review and we have set for ourselves a target of USD 70 billion trade by 2012, which we should be able to achieve.

How do you plan to take up the issue of US Security Bill because of which our IT industry may suffer?
The two governments are preparing for the Trade Policy Forum (TPF), which is an annual feature and this time it will be hosted by Washington. The agenda for the TPF, which will also review the recommendation of the working groups set at the time of the New Delhi TPF last October, will be done in Washington. The private sector advisory group will also meet co-chaired by me and the USTR. It will be an important exchange and opportunity for the two governments to address issues before the visit of US President Barack Obama to New Delhi in early November.

What is the progress in the India-European Union Bilateral Investment and Trade Agreement (BITA)?
In the first half of September, Commerce Secretary Rahul Khullar and European Union (EU) Director General David o' Sullivan will be meeting and would look at those issues which remain contentious. Thereafter, the EU Trade Commissioner Karel De Gucht and I will be meeting in Brussels. After the Commerce Secretary's meeting, I hope it will be possible for us to have this meeting (between Sharma and Gucht) in early October well before the India-EU summit in Brussels in December.

What is the progress in formulating policies for allowing foreign direct investment (FDI) in multi-brand retail and hiking FDI defense manufacturing?
We will examine the inputs which we have received and have a final round of stakeholders’ consultation once a document has been put together by the committee. What is important is to create a broad-based consensus which will help in policy formulation that is my effort and that is exactly what we are trying to do.

At the same time on defense, we will be guided by the sensitivities of Indian defence establishments. I have been in discussion with the Defence Minister. He will be discussing the issue with his PSUs and Defense Procurement Board. We have said that very soon we will make a formal presentation once all the inputs received by the DIPP. We will have a presentation ready to be made to the Defence Minister and his team.