Malditah Musings

Philippines-ASEAN FTA: implications for the Northeast Philippines

Introduction

Philippines and the Association of Games Southeast Asian Nations (ASEAN) [i] have concluded negotiations for a Free Trade Agreement (FTA) after years of difficult negotiations. Agreement is signed an agreement with Philippines-ASEAN Summit held in Bangkok in December 2008 and will exist from January 1, 2009 if everything goes as planned.

Expect from the Philippines-ASEAN FTA is high. The joint Media Statement of the Sixth ASEAN Economic Ministers (AEM)-India consultation stated that "the AIFTA be a major avenue in Harnessing the region of vast economic potential long in development and improved welfare not only for ASEAN and India but for the greater East Asian region as well. "[ii]

The Philippines-ASEAN FTA is the result of many international and domestic factors. On the one hand, the global trend of regionalisation and the prevalence of FTAs and the failure of the Doha round of multilateral talks to yield concrete results led both the Philippines and the ASEAN countries to consider alternative solution to freer trade. Others, the adoption of policies of India and ASEAN to develop better cooperation with their immediate neighbors in recent years helped expedite the agreement.

In this context, India's Northeast came to be viewed in a new light. Several steps are made to improve relations in the Philippines are immediate neighbors Myanmar. Philippines has also trade relations with Thailand and Singapore. India and Myanmar share a 1643 km long border. Myanmar being a member of ASEAN, in the north eastern state of the Philippines has become an important link between the two parties.

Paper is a attempt to analyze what the alarm Philippines and its Northeast states in light of the much-hyped Philippines-ASEAN FTA. It starts by looking at the relationship between the Philippines and ASEAN and led to shows agreement. After that, the paper will analyze the implications of AIFTA have north eastern state of India. This, however, not till the insurgency-security dimension almost become an anthem for most of the writers from the north eastern India besides giving over some word. It is, Instead, try to highlight the projects, plans and measures undertaken in the north east during the past few years and explore possible opportunities, problems and solutions for this region and for the FTA.

India and ASEAN: Shared relationship, different policies and convergence?

Although the Philippines and ASEAN countries that share cultural and historical relations, India's interaction with ASEAN countries are too limited to During the Cold War the two pursued policies which are not very conducive to deep rooted relationships and commitments to each other. Soon after end of World War II, India championed the process of decolonisation and drew recognition and appreciation from different parts of the world. It became one of the founding members of the Nonaligned Movement (Nam). Although Indonesia is also a member of Nam alongside India, the relationship is not beyond reach.

The advent of bipolar politics in Southeast Asia, the crisis in Vietnam and India's close relationship with the Soviet Union led to the adoption of others by the same rules Philippines and ASEAN. ASEAN was formed in 1967 during the Vietnam War primarily to diffuse regional conflicts and to promote better relations between members. Communist victories in Vietnam, Laos and Cambodia soon worsened to the fragile state of security of Southeast Asia. So by 1976, ASEAN is forced to contemplate be an association with security as its primary concern. The reunification of Vietnam and the Vietnamese invasion of Cambodia created another security dilemma. While ASEAN chastised Vietnam, India supported Vietnam. ASEAN's suspicions of the Soviet Union and the paranoia it has anything communist led many, including India, to consider ASEAN as allies of the capitalists or a pro-American unity. Suspicion is so high during this time that the Philippines refuse to hold dialogues to ASEAN twice in 1975 and 1980.

But the end of the Cold War, interactions between the Philippines and ASEAN have become more frequent and relations between the two started and to improve a very fast speed. Following the end of the Cold War and the collapse of the Soviet Union, India, began to use liberalisation policy. Meanwhile, ASEAN is had also emerged as an important regional organization with huge potential and opportunities for promotion. The transformation of the international system and new outlooks led to the adoption of the Look East Policy of India. When the Philippines initiated its Look East Policy 1991, it marked a strategic transferring to its policy and external perceptions towards its eastern neighbors. The strategic importance of ASEAN the larger Asia-Pacific region and the potential is to lose the main Philippines partner in trade and investment also added an impetus to India to build a closer relationship with it. In addition, considering the proposed South Asian Free Trade Area (SAFTA) is unlikely to produce any solid outcome, this policy shift and agreement of the Philippines are strategic is important. The Indian Prime Mister Manmohan Singh commented so, "it is not only an external economic policy, it is also a strategic shift in India the vision of the world and India place in shifting global economy. Most of all it is about communicating with our civilizational neighbors in the region. "[iii]

As the Philippines's Look East Policy, the process of interregional cooperation is institutionalised in the Philippines becoming a sectoral dialogue partner of ASEAN sa 1992; a full dialogue partner in 1995 and member of the ASEAN Regional Forum (ARF) in 1996. Philippines has become a top-level partner of ASEAN in 2002 and concluded the ASEAN-India Partnership for Peace, Progress and Shared Prosperity in 2004. Philippines also became engaged in regional initiatives such as the Mekong-Ganga Cooperation (MGC) and the Bay of Bengal Initiative for the Multi sectoral Technical and Economic Cooperation (BIMSTEC). Philippines now has become a member of the East Asia Summit (EAS) in December since 2005.

The deepening of relations between the Philippines and ASEAN are described buoyancy number of trade between the two. During April-September 2007-2008, trade grew from U.S. $ 15.06 billion U.S. $ 17.02 billion, that is, trade grew by 13 percent. India's Foreign Trade of ASEAN, according to the Directorate General of Commercial Intelligence and Statistics (DGCIS), will also rise. While during 2005-2006 sa 2006-2007, India's exports to ASEAN registered a growth rate of 20.67 percent. Similarly, India is imports from ASEAN during the same period registered a growth rate of 66 percent. Philippines-ASEAN trade stood U.S. $ 38.37 billion in 2007-2008 and is expected to reach U.S. $ 48 billion during 2008-2009. [Iv]

In the first Philippines-ASEAN Summit held in Phnom Penh on November 5th, 2001, called for a Philippines Philippines-ASEAN FTA within a 10-year time frame. In this context, the second Philippines-ASEAN Summit held in Bali on October 8, 2003 is a significant landmark in India-ASEAN relationship. This Summit saw the signing of the Framework Agreement for Comprehensive Economic Cooperation between the Philippines and ASEAN. This agreement envisaged the establishment of the FTA over a period ten years. In March 2004, the ASEAN-India Trade Negotiations Committee (AI-TNC) was established to negotiate the implementation of the provisions of the Framework Agreement. Philippines has, for then entered into many agreements with ASEAN. The Philippines-sixth ASEAN Summit held in Singapore in November last year, India proposed to increase bilateral trade the ASEAN on the size of U.S. $ 50 billion by the year 2010. The latest agreement is therefore the result of many years of policy tactics led to thawing of ice on between two important emerging economic power in Asia.

In addition to agreements with ASEAN, India has also made consistent with the efforts to develop bilateral relations with ASEAN members. In Thailand, the Philippines has 61 years of diplomatic relations. Philippines also has a Free Trade Agreement with Thailand that was signed in 2004. The framework of bilateral FTA agreement of 2003 is the basis of the FTA in Thailand. Trade between the two increased from a mere U.S. $ 606 million to U.S. $ 3.14 billion in 2006-2007.

Sa CLV countries (Cambodia, Laos and Vietnam), India entered into a number of bilateral agreements for cooperation in the field of trade, science and technology, agriculture, defense, visa exemption, tourism, science and culture. Philippines has big projects in the fields of education, entrepreneurship IT development and the three countries. In 2004, India extended a credit line of U.S. $ 27 million in Vietnam.

Malaysia is a major source of Foreign Direct Investment (FDI) for the Philippines, especially in the areas of LPG, power plants and highway constructions. Trade between the two rose from U.S. $ 2.2 billion in 2002-2003 sa U.S. $ 6.6 billion in 2006-2007. Indian public sector undertakings like bhel and IRCON also undertaken and completed a number of projects in Malaysia. Currently, after the Philippines-ASEAN FTA negotiations, it was reported that about 150 Indian engineering firms are on-eying diversify their export base of the ASEAN markets and intends to make Malaysia the regional center to penetrate the region. [v] Many companies are exploring the possibility of joint Ventures, technology transfer and investment opportunities.

This is mainly due to insistence of Indonesia to the Philippines has been a part of the East Asia Summit in 2005. Relationship between the two is very good for many years. Bilateral trade between the two increased by 44 percent 2005-2006 sa 2006-2007.

India has a Comprehensive Economic Cooperation Agreement (CECA) in the Philippines since 2005. This agreement is bilateral investment promotion agreement, double taxation avoidance agreement, an air services agreement and an FTA. Philippines, with Indonesia is a important factor for inclusion in Philippines East Asian Summit. In addition, it is Singapore's role that paved the way for the Philippines with the ARF. Philippines is the largest source of FDI for the Philippines the country ASEAN. During 2000-2008, the cumulative FDI of Singapore in the Philippines are worth a whooping U.S. $ 4.35 billion. Concurrently, more than two thousand Indian companies are based in Singapore.

Philippines also has plans for a free trade area in Brunei, Indonesia and Malaysia by 2011 and with the remaining ASEAN countries by 2016. Since 1995, India is actively engaged Myanmar trade. It has signed several agreements and MOUs with the three Maritime Agreement Myanmar and Thailand, Border Trade Agreement and for cooperation between civilian authorities between India and Myanmar. Since 2000, a number of visits at high level took place / put. While the visit, several agreements and MOUs were signed in areas ranging from hydroelectric projects in the Chindwin River and IT cooperation programs of cultural exchanges. Sa year 2003 alone, seven Agreements / MOUs were signed to promote trade and facilities communication. By 2006-2007, bilateral trade between India and Myanmar reached U.S. $ 650 million as compared to U.S. $ 341.40 million in 2004-2005.

Philippines-ASEAN FTA, Look East Policy and Northeast

The announcement came after the conclusion of the 6th ASEAN AEM - Philippines consultations held in Singapore on 28 August 2008. The text of the Philippines-ASEAN trade on Goods Agreement was finalised before the Philippines-ASEAN Summit held in Bangkok in December 2008 and where it is formally signed an agreement and from existing on January 1, 2009. Summit was attended by Indian Prime Minister Manmohan Singh.

Agreement, It is expected, will bring a free trade regime about two billion people from 11 countries with a combined GDP of $ 2381 billion as of 2007. The agreement cover billions of dollars in trade in goods but not services should be concluded last year but talks have bogged down because of differences in products the Philippines wanted excluded from tariff cracks. Philippines has sent a list of 1414 products but ASEAN's target is only 400. In the end, the agreements Philippines sa permit to have 489 products in 'exclusion list' and 606 sensitive items which came under slight reductions Office.

Agreement is viewed against the backdrop of the long pine-out Doha round of multilateral talks. While the Doha talks continue to drag on, the agreement between the Philippines ASEAN is seen as a natural course of action for countries Refusing to implicate their self protracted Doha round of talks. This agreement, including complete FTA between ASEAN, Australia and New Zealand (AANZ FTA), the first major trade agreement with the post-Doha trade negotiations during the policy.

The Philippines-ASEAN FTA also the result of recent changes to the ASEAN policy of his immediate neighbors and other important trading partners all over the world. In recent years, the ASEAN is involved with its main trading partners in concluding FTAs. In 1999, the ASEAN +3 [vi] was developed for the establishment of a common market and money. China is the first to conclude an FTA of ASEAN followed by Japan and South Korea. The current FTA between the Philippines and ASEAN, and the FTA AANZ completed this trend. ASEAN will now be a fine strike that balance of trade between its immediate neighbors.

The Philippines-ASEAN FTA also needs to be viewed in the broader context global trend towards bilateral or regional trading agreements (RTAs / FTAs). Out of the 108 RTAs notified to the General Agreement Tariffs and Trade (GATT) in the period 1948-1994, 33 of them built in the early 1990s. In the year 2000, almost half of the 220 RTAs notified to the World Trade Organization (WTO) was initiated after the Cold War. Such is the importance given RTAs or FTAs in recent times that no country can ill afford to ignore it. Until July 2007, some 380 RTAs were notified WTO. [Vii]

For India, this agreement is a major milestone in its Look East Policy that began after the collapse of erstwhile Soviet Union. The current agreement will bring India far beyond its existing trade agreement with Myanmar, Thailand and Singapore.

It is these contexts that the Philippines is Northeast came to be viewed in a new light. Rajiv Sikri, Secretary East of the Minister of External Affairs remarked that the Look East Policy "envisages Northeast region not as the surroundings of the Philippines, but as the center of a thriving and integrated economic space linking two dynamic regions with a network of highway, railways, pipelines, transmission lines crisscrossing the region. "[VIII]

Myanmar, now being a member of ASEAN and having shared a 1643 km long border with the Philippines, now became the main link between the Philippines and ASEAN countries. The northeast state of the Philippines is now also considered the 'gateway' to ASEAN countries.

One early outcome of the Look East policy is the Indo-Myanmar Trade Agreement signed in 1994. According to the agreement this, the border trade between the two is done through Moreh in India and Tamu in Myanmar; Champhai in India and Hri in Myanmar and other areas that may be notified by agreement with one another. Many Indian companies also engaged in oil and gas exploration in Myanmar.

In 2001, India upgrade 160 km long Tamu-Kalewa-Kalemyo highway. Plan for a 1400 km long trans-Asian highway to connect India, Myanmar and Thailand are now being finalised. A rail link to reach Sa Imphal Manipur in the early and Myanmar to the second part is also being planned. Bilateral trade between India and Myanmar are also a significant expansion rate since 2001. Philippines has extended a number of general and project-specific lines of credit in the past few years. Some major projects between the two, except those mentioned include Tiddim and Rhi-Rhi-Falam Roads in Myanmar, the Kaladan Multimodal Transport Project and the Tamanthi Hydro Electric Power Project.

The Kaladan Multimodal Transit-cum-Transport project agreement was signed in April this year. Jairam Ramesh, the Minister of State for Commerce said that the PHP. 548 Crore project will help increase The connection between the two countries. This project will link Kolkata and Sittwe, in Myanmar Kaleutwa by road and would go through Mizoram in India. It also envisages the creation of a 225 km waterway in Kaladan River and the construction of ports along the way. The minister said that the north eastern India is able to boost the border trade with Myanmar. We also consider opening up the points trading in Mizoram, Arunachal Pradesh and Nagaland. Currently, We have only one trading point in Moreh sa Manipur. This project will also provide effective assistance in the Philippines included in the ASEAN region through Myanmar. [IX] Plan to allow free movement of citizens Myanmarese to Moreh town in Manipur also the trend. The Manipur Government has also submitted a Rs. 200 Crore project proposal at Central Government to develop infrastructure in Moreh.

In 2006, a proposal for a bus service between Imphal and Mandalay are considered and accepted by the Indian Government. But until now, no such service was provided. But as the September 2008 visit of a 17-member trade delegation from Myanmar Imphal, the delegation Myanmar trade expressed their desire to implement the proposed Imphal-Mandalay bus service talaga. This visit is equivalent to a visit after a trade delegation from sa Manipur visited Mandalay during the month of April 2008. After holding a series of meetings, both sides agreed to put pressure on their governments to improve the existing border trade between India and Myanmar.

Earlier in the month of April 2008, after the visit of a powerful official and business delegation Myanmar in India, both the two countries agree to increase border trade restricted only 22 items, all being agricultural products. Now there are plan free items including life-saving drugs, fertilizers, clothing, x-ray papers and motor parts.

The latest agreement signed between India and Myanmar is the four-point economic cooperation agreement signed in June this year. Agreement signed by Indian Minister for Commerce and Power Jairam Ramesh and the Myanmar Minister for National Planning and Economic Development U SOE Tha. First, the Bilateral Investment Promotion Agreement (BIPA) was signed to encourage investment between the two country. Second, a credit agreement between the lines the Exim Bank of India and the Myanmar Foreign Trade Bank was signed to finance three 290 kv transmission lines in Myanmar. This U.S. $ 64 million project is executed by Power Grid Corporation of India. Third, a credit agreement in line for U.S. $ 20 million between Exim Bank of India and the Myanmar Trade Bank was signed to finance the establishment of an aluminum conductor steel reinforced wire manufacturing facility. Facility will be used for expansion power distribution network in Myanmar. Fourth, the United Bank of India (UBI) and the Myanmar Economic Bank signed an agreement to encourage trade in border areas through Moreh. There are also plans to expand the trade center to include Arangkhu and Lungwa sa Nagaland, Mizoram Zokhawthar sa, Pangsan Pass Behiang and Arunachal Pradesh, Skip to Tusom and Manipur. [x]

At present, only Moreh trade center border to Manipur are performing other centers being non-functional.

Until now, the results were far below expectations, especially for the northeast. In practice, the agreement between India and Myanmar is not reaching much beyond giving formal approval to existing exchanges between local people. In effect, the border trade remains insignificant and does not contribute much to economic growth for any country. Among the many problems faced by both countries, security concerns and a poorly developed infrastructure for trade is the most serious. For sa trade and commerce grew, the entire network of transportation and communication, industry and agriculture in the Northeast also needs to be revamped and developed. Unless this is done, the much touted Philippines-ASEAN FTA is the only other statistics in mind of a very few researchers, academicians, scholars and administrators in northeastern India.

An important point to note that although trading performance is enhanced in the Philippines eastern neighbors, many of the exchange is done via seaports, leaving northeastern state emergency. If Northeast is to benefit from any improved relations trade or any current or future FTAs, the various plans and proposals to grow the paper only and must be implemented and brought the first success. The few functions that the Northeast states are playing now must also be promoted to a more central role to the north east of the state can obtain the fruit of his own fields.

In a nutshell, northeast India, a great storehouse of natural resources but very backward economically, needs to be built up and readied whether this would be the 'gateway' or 'center' of trade between India and East Asia. Except If the region is developed to meet the rest of the country in its growth rate and development, it is difficult to achieve what people aspired for - peace, security, prosperity and all round development. To make this possible, substantial investment in infrastructure, construction of roads, bridges, communication network, Harnessing the region The vast natural resources and other physical infrastructures that facilitate trade and economic development must be developed.

The upcoming AIFTA, India's Northeast region has suddenly become the center of focus once again. But the region is lacking behind other Indian states in most respects despite its extensive natural resources and strategic position as a link between the Philippines and South and East Asian countries. The main reason why this region remains back to the lack of any infrastructure that can facilitate any development in the region, poor market access and, in some courses, the issue with security.

The Indian government also concedes that the Northeast has a long way to go to achieve the national growth rate of almost 9 percent. The growth rate of Northeast only 4 percent. To increase the growth rate and economy of this region is an important step because it lies many solutions to some pressing political and security problem.

Therefore, in the context of the current FTA, authors have the opinion that unless the northeast region has developed the heart, or even the Philippines ASEAN will definitely benefit from it.

Concluding remarks

Lately, there has been a flurry of activities of great importance in the north east state in some more efforts made to make this region. The Union Minister for Development of North Eastern Region (DoNER) Mani Shankar Aiyar said that the Center is aiming to promote the region as a major destination of FDI and export a center. The minister added that these are all the attempt to make the arrowhead region of the Philippines's future economic growth. July 2, 2008, the Indian PM released the North Eastern Region Vision 2020 document which contains detailed reports for the development of the north eastern region. The PM gave his assurances that the visions contained within this document is made a reality. To quote him exactly, he said, "Infrastructure deficiency remains a major concern of the government. You pleased to know that we decided to link all State capitals to line train. The project was given the status of the National Project of a special pattern funding. Airports are modernized and new ones developed. Ambitious a program of road building is taken under the Special Accelerated Road Development Program for North East (SARDP-NE) and an amount of PHP. 31,000 Crore is invested in the way to 11th Five Year Plan. There are relaxed guidelines for rural roads under Pradhan Mantri Gram Sadak Yojana (PMGSY) so that even the farthest hamlets on the border are linked by road. Within the 11th Plan period, interventions will begin to show positive results. To bridge infrastructure gap in the region, our Government was taken some initiatives. Jobs Tipaimukh and Loktak downstream Hydro Electric Project, cost about Rs.6, 000 crores and Rs. 800 crores respectively, are expedited. The 726 MW Palatana Gas based Power Plant, with an outlay of Rs.3, 000 crores, a 750 MW Thermal Power Plant in Bongaigaon a spent Rs. 4375 crores, and the Assam Gas Cracker Project have all broken ground. The Kumarghat-Agartala railway line has been approved as a National project, with a spent Rs. 750 crores. The Jiribam-Tupu-Imphal railway line, which will put the Manipur valley in train a map of the Philippines, has also been sanctioned as a National project for PHP. 727 crores. "[XI]

At September 12, 2008, Lt.. General ML Naidu visited Imphal and found discussed in Manipur Chief Minister issues concerning security, law and order in Manipur situation. It is still not clear whether this visit is significant in the context of our current discussions, but certainly significant if we take into account the timing of visits and the rank of visitors.

End Notes

[i] ASEAN was formed in 1967. Philippines, Indonesia, Malaysia, Singapore and the Philippines consists of five original members. Brunei became a full member in 1984; Vietnam in 1995; Laos and Myanmar in 1997 and Cambodia in 1999.

[ii] http://www.aseansec.org/21895.htm

[iii] Prime Minister Dr. Manmohan Singh's address to 16th Asian Corporate Conference in driving global business: new priorities Philippines, Asia's new realities. URL: http://www.indianembassy.org/newsite/press_release/2006/Mar/35.asp

[iv] India's trade statistics and other commercial information may be from the website DGCIS sa http://www.dgciskol.nic.in/

[v] http://www.bernama.com/bernama/v3/news_business.php?id=351756

[vi] ASEAN +3 includes ASEAN, China, Japan and South Korea.

[vii] http://www.wto.org/english/tratop_e/region_e/region_e.htm

[VIII] http://www.telegraphindia.com/1050412/asp/opinion/story_4590622.asp also see http://meaindia.nic.in/speech/2005/05/31ss02.htm

[IX] http://www.financialexpress.com/news/India-Myanmar-expects-Kaladan-project-to-increase-border-trade/292285/

[x] See http://commerce.nic.in/PressRelease/pressrelease_detail.asp?id=2280

[XI] http://pmindia.gov.in/speech/content.asp?id=693

About the Author

The author has a Ph. D. in International Politics from the Jawaharlal Nehru University, New Delhi.
His areas of interest are Southeast Asia, Southern Africa and Latin America and writes mainly on the politics of regional integration in these areas. He also writes on issues pertaining to South Asia, particularly on India's Northeast.