India floats its own free trade proposal at ASEAN day after China signs pact

China on Monday signed agreements with ASEAN to prevent conflict over long-disputed areas of the South China Sea and to establish the world’s largest free trade zone over the next decade that would boast a total gross domestic product of nearly $2 trillion.

After years of negotiations, ASEAN—composed of Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam—reached an agreement with China on a nonbinding declaration intended to reduce the chances of military confrontation over the Spratly Islands and other disputed areas.

Located amid busy sea lanes and rich fishing waters and believed to be rich in oil and natural gas, the largely uninhabited islands are claimed in part or in whole by the Philippines, Brunei, Malaysia and Vietnam as well as by China and Taiwan.

The deal also implies that all tariff and non-tariff trade barriers between China and ASEAN countries will disappear.

When asked whether India’s interest in an FTA with ASEAN was provoked by the fear that it would be left behind even as China grew in strength and influence, External Affairs Minister Yashwant Sinha said India’s association with ASEAN was based on mutuality of interests rather than fear of competition.

‘‘India was a late entrant to ASEAN, with sectoral talks beginning only in 1992, a full dialogue in 1996 and a summit in 2002,’’ Sinha told reporters today. But the fact remains that India, with its one-billion strong market, hopes to take the Chinese challenge head on. The FTA will also give the Indian industry an opportunity to tap new markets in the East.

After its first ever summit level talks with the grouping, India has also earned its place as an ASEAN dialogue partner. ASEAN countries have China, Japan and North Korea as their dialogue partners with whom they hold summits; the grouping will now hold a separate summit with India as well.

Singapore Prime Minister Goh Chok Tong compared ASEAN and its summit partners with a jumbo jet, Sinha said. ‘‘He said the ASEAN countries were the body of the jumbo jet while the North East Summit partners (China, Japan and North Korea) were one wing, and India had now become the other wing.’’

India has also committed to providing assistance to ASEAN’S newest members—Cambodia, Laos and Vietnam—through the Mekong-Ganga cooperation, Bangladesh-India-Myanmar-Sri Lanka-Thailand Economic Cooperation and the Road Linkage project between India, Myanmar and Thailand which could be extended to Cambodia and Laos.

The PMs of both Cambodia and India stressed on the historical and civilisational linkages between the two nations, said Sinha. He referred to Malaysian Prime Minister Mahathir Mohammed, who underlined the importance of a two-way economic relationship between India and ASEAN nations.

While Indian Railways are helping Malaysia build its own rail network, Malaysia is helping fund India’s highways.