India’s trade officials are finalising out the broad contours of a negotiation strategy for the proposed comprehensive economic cooperation agreement (CECA) with Malaysia aimed to catapult bilateral trade to $16 billion by 2012.
An inter-ministerial meeting was held earlier this month to discuss issues on trade in services under the proposed CECA. The CECA would cover a wide range of areas including telecommunication, financial services and infrastructure among others and negotiations are expected to complete by 2009.
Trade negotiators, who did not wish to be identified, said India would seek binding commitments from Malaysia on a host of sectors including banking and financial services, motion picture production and distribution, construction services, and telecommunications.
“India would seek full commitments including mutual recognition agreements (MRA) in sectors such as construction and architecture,” an official familiar with the negotiations said.
An MRA is an international agreement by which two or more countries agree to recognise one another's conformity assessments and have become common in the World Trade Organisation (WTO) regime.
MRAs include various quality control standards and are also sometimes applied to agreements on the recognition of professional qualifications as well.
In financial services, officials said, India would seek easier access for banks and insurance companies in the South East Asian nation. The first meeting between trade negotiators of both the countries took place in Kuala Lumpur in February this year where the overall architecture of the agreement was discussed, the official said.
The CECA would more than a free trade agreement (FTA) since it covers goods, services, investment, intellectual property rights, and economic cooperation in areas such as education, science and technology and, air transport services, he added.
Analysts would be keenly watching the stand taken by Malaysia on some products such as palm oil. Malaysia, a member of the Association of South East Asian Nations (Asean), has taken a tough stand in the India-Asean talks demanding more market access for its palm oil.
Malaysia is the 23rd largest overall investor in India with a total inflow of $142.98 million during 1991 to 2007. These investments are mainly in the areas of liquified petroleum gas and other products, power plants and highway construction.
The bilateral trade between India and Malaysia stood at $6.6 billion during 2006-07. During 2006-07, India’s exports to Malaysia stood at $1.3 billion and imports from Malaysia at $5.3 billion.
There are over 10 Indian companies including 60 joint ventures operating in Malaysia. Notably, joint ventures include Thapar Group, Aditya Birla Group, BHEL, HMT and IRCON among others.
The CECA negotiations would take place within the framework of recommendations made by the Joint Study Group (JSG) that was adopted by both the countries last year.