Comparative Study of the India-ASEAN FTA and Malaysia India comprehensive economic cooperation agreement

Abstract

The Malaysia- India Comprehensive Economic Cooperation Agreement, which recently went into effect from July 1st, 2011, is a step towards taking the attractive trade position of India and Malaysia to the next level. The nature of trade between India and Malaysia has goes back for centuries, before both countries were colonised by the British. The rapid growth of Malaysia since the 80s together with the liberalisation of the Indian economy since the 1991 has shown its impact with the rapid growth in trade between the countries. Amongst the other ASEAN countries, Malaysia plays a very important role in terms of the value of trade with India. Malaysia is the third most important trading country amongst the ASEAN countries, and also India’'s gateway between ASEAN and China. India is also Malaysia largest trading partner for Malaysia in South Asia. India and Malaysia have, in recent years, seen tremendous increase in the levels of trade in goods, services, and investments, which was further improved with the ASEAN-India agreement. The Malaysia-India Comprehensive Economic Cooperation Agreement, which shall be henceforth referred to as MICECA goes beyond the ASEAN-India agreement in several ways. For example, one fundamental difference is that the current implementation of ASEAN-India only deals with Trade in Goods, whereas the MICECA also covers Trade in Services and Investments. This allows scope for greater trade between the two countries, with an expected increase in trade worth USD $15 million by 2015.i This report will look at the implications of the newly signed Malaysia-India CECA, with respect to the India-ASEAN trade agreement to analyse the comprehensiveness of the agreement and the relative benefit of the MICECA over the India-ASEAN FTA. The report will be structured according to the three segments of trade, namely, Goods, Services, and Investment.