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EEU-Vietnam FTA likely to boost India's trade with Eurasian, Southeast Asian regions |
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NEW DELHI: A major step was taken last week towards economic integration between Eurasian region and Southeast Asia that is significant for boosting India's trade in the region ahead of Prime Minister Narendra Modi's proposed visit to Russia and Central Asia this July.
Southeast Asia's emerging economy Vietnam and the Eurasian Economic Union (EEU) on Friday signed a free trade agreement (FTA) that officials said would boost both bilateral and collective cooperation between the two sides. Incidentally, this comes days ahead of President Pranab Mukherjee's trip to Belarus this week. Belarus is a member of EEU and India and Belarus are expected to discuss India joining EEU during Mukherjee's trip, officials said.
In May 2014, Presidents of Russia, Belarus, and Kazakhstan had signed an agreement to form the Eurasian Economic Union (EEU), which came into being on January 1, 2015.
The Vietnam-EEU FTA is expected to foster a stable and favorable legal framework for economic development of signatories. Economists have noted that the agreement stipulates liberalizing customs regulations. While tariff reductions and exemptions are mandated for listed commodities, each country can maintain customs protections for their most sensitive commodities. India would take a cue from Vietnam-EEU FTA in deciding to join to EEU, experts noted. This FTA became the first international document on creating a free trade zone between the EEU and a third party.
The EEU currently comprises Russia, Belarus, Kazakhstan and Armenia. Ratification procedures are currently under way for Kyrgyzstan to join the trade bloc. If India decides to join EEU, it will assist India to realize the untapped potential in trade between Delhi and countries of the region. India's trade with the region remain abysmally low notwithstanding strong political ties between the two entities. Besides Russia, Modi is also planning to visit all five Central Asian Republics in July including Kazakhstan and Kyrgyzstan. Russia has been pushing India to join EEU. Modi's visit is expected to focus on expanding economic partnership with the Eurasian and Central Asian region by harnessing markets and natural resources, government officials hinted.
Over 40 countries and unions could partners of the Eurasian Economic Union (EEU) and negotiations are currently underway, according to Russian Prime Minister Dmitry Medvedev. According to the Russian PM, the agreement with Vietnam as a breakthrough decision as it was the first such treaty. Chairman of the Board of the Eurasian Economic Commission Viktor Khristenko described the agreement as "A historic act." Officials in India hinted that India is closely studying the agreement to understand the benefits.
The free trade zone will save exporters from the EEU about $40-60 million in the first year of its operations. Vietnamese companies, in turn, can expect savings of up to $5 million-$10 million a year. EEU-Vietnam FTA will enter into force 60 days after it is ratified in accordance with national legislation in all EEU member countries and Vietnam.
Vietnam's Prime Minister Nguyen Tan Dung, who signed the document with EEU, has said that the FTA between Vietnam and the Eurasia Economic Union (EAEU) was a modern, comprehensive deal that has the required flexibility and opportunity of benefits. Vietnam and the EEU began negotiations for the FTA in 2013.
Meanwhile, Dung had separate bilateral meetings with all member states of EEU on the sidelines of the signing of FTA. In his meeting with Medvedev, the two leaders discussed the possibility of investments under the FTA. Russia also affirmed that his country advocates settling disputes by peaceful means on the basis of international law and the UN Convention on the Law of the Sea (UNCLOS) in the South China Sea region where China in recent weeks have stepped up its activities on the artificial islands and taken belligerent stand vis-a-vis USA. Dung also met Kazakhstan President Nursultan Nazarbayev and discussed cooperation in oil and gas sectors. Incidentally India is present in the oil and gas sectors of both Kazakhstan and Vietnam.
Source : economictimes.indiatimes.com
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