ASEAN creates new economic community

KUALA LUMPUR: Leaders of the ASEAN grouping on Sunday formally created a unified economic community larger than the European Union, a move that could bolster economic ties with India and give it greater access with a market whose combined GDP is $2.57 trillion.

Prime Minister Narendra Modi was in the audience, seated next to his Chinese counterpart Li Keqiang, as 10 leaders of the Association of Southeast Asian Nations formally signed the 2015 Kuala Lumpur Declaration on Establishment of the ASEAN Economic Community.

The community, known by its acronym AEC, was initially envisaged in 2002. The ASEAN members have already taken several steps, such as the removal of tariff barriers and visa restrictions, to make it a reality.

India already has a strong connect with the ASEAN grouping, with which it has some 30 dialogue mechanisms. This includes a summit and seven ministerial groups that cover foreign affairs, commerce, telecommunications, tourism, agriculture, environment and renewable energy.

The core of the ASEAN-India partnership is economic – the grouping is India’s fourth largest trading partner and India, in turn, is the sixth largest trading partner for ASEAN. Trade between the two sides amounted to $76.52 billion in 2014-15, with India’s exports worth $31.8 billion and imports $44.7 billion.

Indian officials said the ASEAN-India Strategic Partnership had gained momentum after Prime Minister Modi unveiled his “Act East” policy at the last ASEAN-India Summit in Myanmar in November 2014.

India and ASEAN are also working jointly to address nontraditional security threats such as terrorism, human and drug trafficking, cyber crimes and piracy in the Malacca Straits.

Investment flows between ASEAN and India are growing. Between April 2007 and March 2015, India invested $38.6 billion in ASEAN while the grouping invested $32.4 billion in India. The economic integration process got a boost with the creation of the ASEAN-India Free Trade Area in July this year.