Trade diplomats in New Delhi have increasingly targeted a foundational regional pact, casting the 2009 ASEAN-India Goods in Trade Agreement as a historic diplomatic misstep that saddled the country with asymmetric obligations. According to reporting by thediplomat.com, Indian officials and trade representatives frequently argue that inexperienced negotiators rushed into the pact, opening domestic markets while securing few commercial concessions in return and allowing Chinese manufacturers to reroute goods through Southeast Asia.
Origins of the Trade Imbalance
The prevailing narrative that the pact created New Delhi’s commercial shortfall contradicts documented economic history. Official trade data shows that India actually began running a trade deficit with the Association of Southeast Asian Nations in 1996, fully thirteen years before the agreement was formally signed. As thediplomat.com noted, this imbalance originated from Southeast Asia’s structural transition from agrarian economies to manufacturing hubs, a shift further accelerated by the currency devaluations of the 1997 Asian Financial Crisis. While the total volume of the trade deficit has expanded over the last thirty years, the fundamental ratio between imports and exports remains largely consistent with levels recorded in the 1990s.
The India-ASEAN Summit was a productive one. We discussed how to further strengthen the Comprehensive Strategic Partnership between India and ASEAN. We look forward to deepening trade ties, cultural linkages and cooperation in technology, connectivity and other such sectors. pic.twitter.com/qSzFnu1Myk
Tough Negotiations and Protective Scoping
Following the 1997 financial turmoil, ASEAN pursued bilateral trade accords with six major regional partners, leaving India eager to join subsequent waves of integration to avoid diplomatic isolation. Far from being outmaneuvered, Indian negotiators utilized decades of experience from multilateral forums like the GATT and the World Trade Organization to push for strict domestic protections. The resulting text became the shallowest of all ASEAN-plus-one agreements. While comparable regional pacts mandated tariff elimination coverage exceeding 90 percent, the AITIGA committed parties to roughly 79 percent. Mirroring this caution, Indonesia offered India only 48.7 percent tariff elimination while extending over 91 percent coverage to other partners, including Australia. Furthermore, the pact instituted stringent rules of origin requiring dual compliance—incorporating 35 percent local content alongside a change in tariff subheading—which ultimately discouraged many exporters from utilizing its preferential terms.
Diplomatic Fallout and Unresolved Reviews
Constructing a narrative around the 2009 pact as a flawed deal has hampered New Delhi’s economic confidence across Southeast Asia, influencing subsequent decisions such as the country’s exit from the Regional Comprehensive Economic Partnership and its hesitation to conclude bilateral deals with nations like Thailand and Indonesia. The diplomatic friction has also stalled broader cooperation, leaving important frameworks like the 2014 ASEAN-India Trade in Services Agreement unrevised despite India maintaining a services surplus in the region. Although both sides agreed to initiate a formal review of the goods agreement in 2015, diplomats have yet to conclude the process.
