India-ASEAN Framework Agreement on Comprehensive Economic Cooperation (2003)

India-ASEAN Free Trade Agreement

As per the recent Indo-ASEAN pact, negotiations for free trade area in goods is slated to be
finalised by June 30, 2005 and that for services and investments the negotiations are slated to
begin in 2005 and conclude in 2007. Negotiations on exchange of tariff concessions under EHS
will begin from November 1, 2004. A trade negotiating committee will begin framing the rules
of origin, modalities for tariff reduction and FTA in January 2004.

India has agreed to special and differential treatment to ASEAN group and align its peak tariff
levels. India will reduce its tariff for Brunei, Cambodia, Laos, Indonesia, Malaysia, Myanmar,
Singapore, Thailand and Vietnam in 2011. Correspondingly while Brunei, Indonesia, Malaysia,
Singapore and Thailand will reduce their tariff for India in 2001, the new ASEAN members like
Cambodia, Laos, Myanmar and Vietnam (CLMV) will do so in 2016. Phillipines which has
expressed its reservations to the FTA has agreed to eliminate its tariff on reciprocal basis for
India by 2016. India will unilaterally extend concessions on 11 tariff lines to CLMV.

The agreement and the list of items under the Early Harvest Programme are being reproduced
below:

FRAMEWORK AGREEMENT
ON COMPREHENSIVE ECONOMIC COOPERATION BETWEEN THE REPUBLIC OF INDIA
AND
THE ASSOCIATION OF SOUTH EAST ASIAN NATIONS

Preamble

WE, the Heads of State/Government of the Republic of India (India), and Brunei Darussalam,
the Kingdom of Cambodia (Cambodia), the Republic of Indonesia (Indonesia), the Lao People’s
Democratic Republic (Lao PDR), Malaysia, the Union of Myanmar (Myanmar), the Republic of
the Philippines (the Philippines), the Republic of Singapore (Singapore), the Kingdom of
Thailand (Thailand), the Socialist Republic of Viet Nam (Viet Nam), Member States of the
Association of South East Asian Nations (collectively, "ASEAN" or "ASEAN Member States", or
individually, "ASEAN Member State");

Recalling that in 2002, we had agreed on the importance of enhancing our close economic
cooperation and to work towards an India-ASEAN Regional Trade and Investment Area (RTIA)
as a long-term objective;

Desiring to adopt a Framework Agreement on Comprehensive Economic Cooperation (this
Agreement) between India and ASEAN (collectively, "the Parties", or individually referring to
India or to an ASEAN Member State as a "Party") that is forward-looking in order to forge a
closer economic partnership in the 21st century;

Desiring to minimise barriers and deepen economic linkages between the Parties; lower costs;
increase intra-regional trade and investment; increase economic efficiency; create a larger
market with greater opportunities and larger economies of scale for the businesses of the
Parties; and enhance the attractiveness of the Parties to capital and talent;

Recognising the important role and contribution of the business sector in enhancing trade and
investment between the Parties and the need to further promote and facilitate their cooperation
and utilisation of greater business opportunities provided by the India-ASEAN RTIA;

Recognising the different stages of economic development among ASEAN Member States and
the need for flexibility, including the need to facilitate the increasing participation of Cambodia,
Lao PDR, Myanmar and Viet Nam (the New ASEAN Member States) in the India-ASEAN
economic co-operation and the expansion of their exports, inter alia, through the strengthening
of their domestic capacity, efficiency and competitiveness;

Reaffirming the rights, obligations and undertakings of the respective parties under the World
Trade Organisation (WTO), and other multilateral, regional and bilateral agreements and
arrangements; and

Recognising that regional trade arrangements can contribute towards accelerating regional
and global liberalisation and as building blocks in the framework of the multilateral trading
system,

Have agreed as follows:

ARTICLE 1
Objectives

The objectives of this Agreement are to:
- strengthen and enhance economic, trade and investment co-operation between the Parties;
- progressively liberalise and promote trade in goods and services as well as create a
transparent, liberal and facilitative investment regime;
- explore new areas and develop appropriate measures for closer economic co-operation
between the Parties; and
- facilitate the more effective economic integration of the new ASEAN Member States and bridge
the development gap among the Parties.

ARTICLE 2
Measures For Economic Cooperation

The Parties agree to enter into negotiations in order to establish an India-ASEAN Regional
Trade and Investment Area (RTIA), which includes a Free Trade Area (FTA) in goods, services
and investment, and to strengthen and enhance economic cooperation through the following:

- progressive elimination of tariffs and non-tariff barriers in substantially all trade in goods;
- progressive liberalisation of trade in services with substantial sectoral coverage;
- establishment of a liberal and competitive investment regime that facilitates and promotes
investment within the India-ASEAN RTIA;
- provision of special and differential treatment to the New ASEAN Member States;
- provision of flexibility to the Parties in the India-ASEAN RTIA negotiations to address their
sensitive areas in the goods, services and investment sectors with such flexibilities to be
negotiated and mutually agreed based on the principle of reciprocity and mutual benefits;
- establishment of effective trade and investment facilitation measures, including, but not limited
to, simplification of customs procedures and development of mutual recognition arrangements;
- expansion of economic cooperation in areas as may be mutually agreed between the Parties
that will complement the deepening of trade and investment links between the Parties and
formulation of action plans and programmes in order to implement the agreed sectors/areas of
co-operation; and
- establishment of appropriate mechanisms for the purposes of effective implementation of this
Agreement.

ARTICLE 3
Trade In Goods

(1) With a view to expediting the expansion of trade in goods, the Parties agree to enter into
negotiations in which duties and other restrictive regulations of commerce (except, where
necessary, those permitted under Article XXIV (8)(b) of the WTO General Agreement on Tariffs
and Trade (GATT)) shall be eliminated on substantially all trade in goods between the Parties.

(2) For the purposes of this Article, the following definitions shall apply unless the context
otherwise requires:
- "applied Most Favoured Nation (MFN) tariff rates" shall refer to the respective applied rates
of the Parties as of 1 July 2004; and
- "non-tariff measures" shall include non-tariff barriers.

(3) Upon signing of this Agreement, the Parties shall commence consultations on each other’s
trade regime, including, but not limited to the following:

  • (a) trade and tariff data;
  • (b) customs procedures, rules and regulations;
  • (c) non tariff measures including, but not limited to import licensing requirement and procedure, quantitative restrictions, technical barriers to trade, sanitary and phytosanitary;
  • (d) intellectual property rights rules and regulations; and
  • (e) trade policy.

(4) The tariff reduction or elimination programme of the Parties shall require tariffs on listed
products to be gradually reduced and, where applicable, eliminated in accordance with this
Article.

(5) The products which are subject to the tariff reduction or elimination programme under this
Article shall include all products not covered by the Early Harvest Programme (EHP) under
Article 7 of this Agreement, and such products shall be categorised into two tracks as follows:

  • (a) Normal Track: Products listed in the Normal Track by a Party on its own accord shall have their respective applied MFN tariff rates gradually reduced or eliminated in accordance with specified schedules and rates (to be mutually agreed by the Parties) over a period from:
    • (i) 1 January 2006 to 31 December 2011 for India, and Brunei Darussalam, Indonesia, Malaysia, Singapore and Thailand;
    • (ii) 1 January 2006 to 31 December 2016 for India and the Philippines; and
    • (iii) 1 January 2006 to 31 December 2011 for India and 1 January 2006 to 31 December 2016 for the New ASEAN Member States. In respect of those tariffs which have been reduced but have not been eliminated, they shall be progressively eliminated within timeframes to be mutually agreed between the Parties.
  • (b) Sensitive Track:
    • (i)The number of products listed in the Sensitive Track shall be subject to a maximum ceiling to be mutually agreed among the Parties.
    • (ii)Products listed in the Sensitive Track by a Party on its own accord shall, where applicable, have their respective applied MFN tariff rates progressively reduced/eliminated within timeframes to be mutually agreed between the Parties.

(6) The commitments undertaken by the Parties under this Article and Article 7 of this
Agreement shall fulfil the WTO requirements to eliminate tariffs on substantially all the trade
between the Parties.

(7) The specified tariff rates/tariff preferences to be mutually agreed between the Parties
pursuant to this Article shall set out only the limits of the applicable tariff rates/preferences or
range for the specified year of implementation by the Parties.

(8) The negotiations between the Parties to establish the India-ASEAN RTIA covering trade in
goods shall also include, but not be limited to the following:

  • (a) modalities, including detailed rules governing the tariff reduction and/or elimination;
  • (b) Rules of Origin;
  • (c) treatment of out-of-quota rates;
  • (d) modification of a Party’s commitments under the agreement on trade in goods based on WTO agreements;
  • (e) non-tariff measures/barriers, including, but not limited to, quantitative restrictions or prohibition on the importation of any product or on the export or sale for export of any product, as well as sanitary and phytosanitary measures and technical barriers to trade;
  • (f) safeguards based on the WTO agreements;
  • (g) disciplines on subsidies and countervailing measures and anti-dumping measures based on the existing WTO agreements; and
  • (h) facilitation and promotion of effective and adequate protection of trade-related aspects of intellectual property rights based on existing WTO, World Intellectual Property Organisation (WIPO) and other relevant agreements.

ARTICLE 4
Trade In Services

With a view to expediting the expansion of trade in services, the Parties agree to enter into
negotiations to progressively liberalise trade in services on a preferential basis with substantial
sectoral coverage. Such negotiations shall be directed to:
- progressive elimination of substantially all discrimination between or among the Parties and/or
prohibition of new or more discriminatory measures with respect to trade in services between
the Parties, except for measures permitted under Article V(1)(b) of the WTO General Agreement
on Trade in Services (GATS);
- expansion in the depth and scope of liberalisation of trade in services beyond those undertaken
by India and ASEAN Member States under the GATS; and
- enhanced cooperation in services between the Parties in order to improve efficiency and
competitiveness, as well as to diversify the supply and distribution of services of the respective
service suppliers of the Parties.

ARTICLE 5
Investment

To promote investments and to create a liberal, facilitative, transparent and competitive
investment regime, the Parties agree to:
- enter into negotiations in order to progressively liberalise their investment regimes;
- strengthen cooperation in investment, facilitate investment and improve transparency of
investment rules and regulations; and
- provide for the protection of investments.

ARTICLE 6
Areas of Economic Cooperation

(1) Where appropriate, the Parties agree to strengthen their cooperation in the following areas,
including, but not limited to:

  • (a) Trade Facilitation:
    • (i) Mutual Recognition Arrangements, conformity assessment, accreditation procedures, and standards and technical regulations;
    • (ii) non-tariff measures;
    • (iii) customs cooperation;
    • (iv) trade financing; and
    • (v) business visa and travel facilitation.
  • (b) Sectors of Cooperation:
    • (i) agriculture, fisheries and forestry;
    • (ii) services: media and entertainment, health, financial, tourism, construction, business process outsourcing, environmental;
    • (iii) mining and energy: oil and natural gas, power generation and supply;
    • (iv) science and technology: information and communications technology, electronic-commerce, biotechnology;
    • (v) transport and infrastructure: transport and communication;
    • (vi) manufacturing: automotive, drugs and pharmaceuticals, textiles, petrochemicals, garments, food processing, leather goods, light engineering goods, gems and jewellery processing;
    • (vii) human resource development: capacity building, education, technology transfer; and
    • (viii) others: handicrafts, small and medium enterprises, competition policy, Mekong Basin Development, intellectual property rights, government procurement.
  • (c) Trade and Investment Promotion:
    • (i) fairs and exhibitions;
    • (ii) India-ASEAN weblinks; and
    • (iii) business sector dialogues.

(2) The Parties agree to implement capacity building programmes and technical assistance,
particularly for the New ASEAN Member States, in order to adjust their economic structure and
expand their trade and investment with India.

(3) Parties may establish other bodies as may be necessary to coordinate and implement any
economic cooperation activities undertaken pursuant to this Agreement.

ARTICLE 7
Early Harvest Programme

(1) With a view to accelerating the implementation of this Agreement, the Parties agree to
implement an EHP, which is an integral part of the India-ASEAN RTIA, for products covered
under paragraph 3(a) below. The progressive tariff reduction under the EHP shall commence
from 1 November 2004, and tariff elimination shall be completed by 31 October 2007 for India
and ASEAN-6, and 31 October 2010 for the New ASEAN Member States.

(2) For the purposes of this Article, the following definitions shall apply unless the context
otherwise requires:

  • (a) "ASEAN 6" refers to Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand; and
  • (b) "applied MFN tariff rates" shall refer to the respective applied rates of the Parties as of 1 July 2004.

(3) The product coverage, tariff reduction and elimination, removal of non-tariff barriers, rules of
origin, trade remedies and emergency measures applicable to the EHP shall be as follows:

  • (a) Product Coverage: Common products on which the Parties agree to exchange tariff concessions are listed in Annex A. Products on which India accords concessions to the New ASEAN Member States are listed in Annex B.
  • (b) Modality for Tariff Reduction and Elimination: The modality for tariff reduction and elimination for the products covered by the EHP shall be finalised under Article 8(2) of this Agreement.
  • (c) Removal of non-tariff measures: In order to fully realise the potential benefits of the EHP, the parties shall promote and facilitate trade in all products listed in the EHP. The parties shall also endeavour to refrain from using non-tariff measures adversely affecting trade in Early Harvest products.
  • (d) Rules of Origin: Products covered by the EHP shall qualify for tariff preferences in accordance with the Rules of Origin to be agreed under Article 8(2) of this Agreement.
  • (e) Application of WTO provisions: The WTO provisions governing modification of commitments, safeguard actions, emergency measures and other trade remedies, including anti-dumping and subsidies and countervailing measures, shall, in the interim, be applicable to the products covered under the EHP and shall be superseded and replaced by the relevant disciplines negotiated and agreed to by the Parties under Article 3(8) of this Agreement once these disciplines are implemented.

(4) The Parties shall also explore the feasibility of cooperation in the areas listed in Annex C.

ARTICLE 8
Timeframes

(1) For trade in goods, negotiations on the agreement for tariff reduction/elimination and other
matters as set out in Article 3 of this Agreement shall commence in January 2004 and be
concluded by 30 June 2005 in order to establish the India-ASEAN FTA.

(2) The negotiations on Rules of Origin for trade in goods under Articles 3 and 7 and modality
for tariff reduction and elimination under Article 7 shall be concluded no later than 31 July 2004.

(3) For trade in services and investments, the negotiations on the respective agreements shall
commence in 2005 and be concluded by 2007. The identification, liberalisation, etc., of the
sectors of services and investment shall be finalised for implementation subsequently in
accordance with the timeframes to be mutually agreed: (a) taking into account the sensitive
sectors of the Parties; and (b) with special and differential treatment and flexibility for the New
ASEAN Member States.

(4) For other areas of economic cooperation, the Parties shall continue to build upon existing or
agreed programmes set out in Article 6 of this Agreement, develop new economic cooperation
programmes and conclude agreements on the various areas of economic cooperation. The
Parties shall do so expeditiously for early implementation in a manner and at a pace acceptable
to all the Parties concerned. The agreements shall include timeframes for the implementation of
the commitments therein.

ARTICLE 9
Most-Favoured Nation Treatment

India shall continue to accord Most-Favoured Nation (MFN) Treatment consistent with WTO
rules and disciplines to all the non-WTO ASEAN Member States upon the date of signature of
this Agreement.

ARTICLE 10
General Exceptions

Subject to the requirement that such measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between or among the Parties
where the same conditions prevail, or a disguised restriction on trade within the India-ASEAN
FTA, nothing in this Agreement shall prevent any Party from taking action and adopting
measures for the protection of its national security or the protection of articles of artistic, historic
and archaeological value, or such other measures which it deems necessary for the protection
of public morals, or for the protection of human, animal or plant life, health and conservation of
exhaustible natural resources.

ARTICLE 11
Dispute Settlement Mechanism

(1) The Parties shall, within one (1) year after the date of entry into force of this Agreement,
establish appropriate formal dispute settlement procedures and mechanism for the purposes of
this Agreement.

(2) Pending the establishment of the formal dispute settlement procedures and mechanism
under paragraph 1 above, any disputes concerning the interpretation, implementation or
application of this Agreement shall be settled amicably by mutual consultations.

ARTICLE 12
Institutional Arrangements for the Negotiations

(1) There shall be established an ASEAN-India Trade Negotiating Committee (TNC) to carry out
the programme of negotiations set out in this Agreement.

(2) The ASEAN-India TNC may invite experts or establish any Working Group as may be
necessary to assist in the negotiations of all sectors in the India-ASEAN RTIA.

(3) The ASEAN-India TNC shall regularly report to the Minister of Commerce and Industry of
India and the ASEAN Economic Ministers (AEM-India Consultations), through the meetings of
the ASEAN Senior Economic Officials and India (SEOM-India Consultations), on the progress
and outcome of its negotiations.

(4) The Ministry of Commerce and Industry, Government of India, and the ASEAN Secretariat
shall jointly provide the necessary secretariat support to the ASEAN-India Trade Negotiating
Committee (TNC) whenever and wherever negotiations are held.

ARTICLE 13
Miscellaneous Provisions

(1) This Agreement shall include the Annexes and the contents therein, and all future legal
instruments agreed pursuant to this Agreement.

(2) Except as otherwise provided in this Agreement, this Agreement or any action taken under it
shall not affect or nullify the rights and obligations of a Party under existing agreements to which
it is a party.

(3) The Parties shall endeavour to refrain from increasing restrictions or limitations that would
affect the application of this Agreement.

(4) Any ASEAN Member State may defer its participation in the implementation of this
Agreement provided that a notification is given to the other parties within twelve (12) months
from the date of signing of this Agreement. Any extension of the negotiated concessions to such
ASEAN Member State shall be voluntary on the part of the parties participating in such
implementation. The ASEAN Member State concerned shall participate in the implementation of
this Agreement at a later date on the same terms and conditions, including any further
commitments that may have been undertaken by the other parties by the time of such
participation.

ARTICLE 14
Amendments

The provisions of this Agreement may be modified through amendments mutually agreed upon
in writing by the Parties.

ARTICLE 15
Depository

For the ASEAN Member States, this Agreement shall be deposited with the Secretary-General
of ASEAN, who shall promptly furnish a certified copy thereof to India and each ASEAN
Member State.

ARTICLE 16
Entry into Force

(1) This Agreement shall enter into force on 1 July 2004.

(2) The Parties undertake to complete their internal procedures for the entry into force of this
Agreement prior to 1 July 2004.

(3) Where a Party is unable to complete its internal procedures for the entry into force of this
Agreement by 1 July 2004, the Agreement shall come into force for that Party upon the date of
notification of the completion of its internal procedures. The Party concerned, however, shall be
bound by the same terms and conditions, including any further commitments that may have
been undertaken by the other Parties under this Agreement by the time of such notification.

(4) A Party shall upon the completion of its internal procedures for the entry into force of this
Agreement notify all the other parties in writing.

IN WITNESS WHEREOF, WE have signed this Framework Agreement on Comprehensive
Economic Cooperation between the Republic of India and the Association of South East Asian
Nations.

DONE at Bali, this 8th day of October, 2003 in duplicate copies in the English Language.

For the Republic of India
ATAL BIHARI VAJPAYEE
Prime Minister

For Brunei Darussalam
HAJI HASSANAL BOLKIAH
Sultan of Brunei Darussalam

For the Kingdom of Cambodia
SAMDECH HUN SEN
Prime Minister

For the Republic of Indonesia
MEGAWATI SOEKARNOPUTRI
President

For the Lao People’s Democratic Republic
BOUNNHANG VORACHITH
Prime Minister

For Malaysia
MAHATHIR BIN MOHAMAD
Prime Minister

For the Union of Myanmar
GENERAL KHIN NYUNT
Prime Minister

For the Republicof the Philippines
GLORIA MACAPAGAL-ARROYO
President

For the Republic of Singapore
GOH CHOK TONG
Prime Minister

For the Kingdom of Thailand
DR. THAKSIN SHINAWATRA
Prime Minister

For the Socialist Republic of Viet Nam
PHAN VAN KHAI
Prime Minister

(for the annexes, see attached PDF)

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