During the last decade two opposing views prevailed regarding the direction of global trade in the future. One view suggested that the world is dividing into major regional trading groups such as the European Union, North America Free trade Agreement (NAFTA), ASEAN Free trade Area that are now and will continue to be the major markets of the future. The other view was that global economic power may be shifting away from the traditional industrialized markets to the developing world and its emerging markets. China’s ascendancy and the continuing networking among countries through bilateral and multilateral trade agreements such as the WTO are yielding a third view. The dominant trend is a new globalization of markets where the notion of nation is becoming less important and the desires of consumers begin to dominate.
The most important argument given in support of this last view is that developed countries have mature, stable markets dominated by global companies. Their economies will grow more slowly than emerging markets and offer less opportunity for new trade. Conversely, enormous demand will be created as emerging economies continue the rate of economic development experienced over the last decade. These emerging economies will need highways, communications networks, utilities, factories, and the other capital goods necessary for industrialized. And as their economies continue to prosper, consumer goods will be needed to satisfy the demands of a newly affluent consumer market. Rather than international trade being driven by the major industrialized countries, emerging economies may be the engine for global market growth. Many experts predict that over the next 50 years the majority of global economic growth will be in the developing world, principally in those countries identified as emerging markets. While most of the immediate growth will be accounted for by 10 countries now on the threshold of expansion many of the 120 other developing countries in Europe, Latin America and Asia are awakening to the desire for economic development and industrialization and may soon be among the future emerging markets.
India’s Trade with Asia
India’s trade with East Asia and the ASEAN region comprising the ASEAN countries (viz., Indonesia, Malaysia, Singapore, Thailand, Philippines, Brunei, Vietnam, Myanmar, Laos, and Cambodia), Australia, New Zealand and countries of Oceania stood at some US $ 30 billion during the year 2005-06 registering a growth of about 30 per cent over the previous year. Traditionally, India has an adverse balance of trade in the region. Major destinations for India’s exports in the region are Singapore, Indonesia, Malaysia, Thailand, Australia, and Vietnam Socialist Republic. The major sources of imports are Australia, Indonesia, Malaysia, Singapore, Thailand and Myanmar. Exports to the ASEAN region grew by about 24 per cent during the year 2005-06 over the previous year and imports witnessed a growth of 20 per cent in the same period. As regards the East Asian region the comparable figures were 17 per cent and 30 per cent respectively. During the period April – October, 2006 exports to ASEAN region grew by 29 per cent over 2004-05.
Major Items of Export and Import
The principal commodities of export include petroleum products, oil meal, gem and jewellery, electronic goods, cotton yarn/readymade garments, cotton, machinery and instruments, primary /semi-finished iron and steel, transport equipment, marine products, drugs/pharmaceuticals, inorganic /organic / agro chemicals, dyes intermediates etc. The major commodities imported from this region are coal / coke / briquettes, gold, vegetable oils, electronic goods, organic chemicals, machinery except electrical machinery, professional instruments, wood and wood products, non-ferrous metals, metal ores and metal scrap, raw wool etc.
Trade promotion activities
India has Joint trade committees with New Zealand, Myanmar and Thailand a Joint working group on trade with Philippines, a Joint Working Group on energy and minerals and also a Joint Business Group on textiles and natural fibres with Australia. In addition there is a Joint Commission with Australia at the ministerial level. A Trade and Economic Framework (TEF) Agreement has also been signed with Australia for enhancing bilateral trade and investment on a comprehensive basis.
India has Joint Business Councils (JBCs) established at the business level, with Singapore, New Zealand, Australia, Malaysia, Indonesia, Thailand, Vietnam and Philippines. Meetings of JBCs are held between the business communities of both sides to discuss a wide range of issues of mutual interest for expansion of bilateral trade.
Under the India Singapore Comprehensive Economic Cooperation Agreement (CECA): The Mutual recognition agreement (MRA) in goods has operationalized both electrical and electronic sector and telecom sector.
South Asia and SAARC
The South Asia region comprises India, Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.