Tight language, review windows key to effective FTAs, says FM Sitharaman

The finance minister delivered the Pandit Hriday Nath Kunzru Memorial Lecture 2024 at Jawaharlal Nehru University on March 1.

'Tight' language and clauses for review are key to ensuring the free trade agreements (FTA) India enters into work effectively, Finance Minister Nirmala Sitharaman has said.

Speaking at Jawaharlal Nehru University on March 1 after delivering the Pandit Hriday Nath Kunzru Memorial Lecture 2024, Sitharaman cited the example of India's trade pact with the Association of Southeast Asian Nations, or ASEAN, and said it was a "classic case" of one that had gone against India.

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"It's language makes me sit up each time with anxiety. If anything so laid-back, if anything so casual and giving away things which we are unable to retrieve even today… There is not even a review clause," Sitharaman said.

"ASEAN is a classic case that has gone against us. And government is unable to retract or bring them on the table and say 'come, let us have an open discussion' because they are happily benefiting. I don't blame them. It is up to us to take care of our interests," she further said, adding that the commerce ministry is in the process of reviewing it.

The ASEAN-India Trade in Goods Agreement (AITIGA), signed in 2009, is currently being reviewed after both sides, in September 2022, tasked the AITIGA Joint Committee with making the agreement more facilitative and mutually beneficial. The third meeting of the joint committee was recently held in New Delhi from February 16-19.

ASEAN includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. In 2022-23, India's total trade with ASEAN stood at $131.57 billion. However, India had a trade deficit $43.57 billion.

India is also looking to review certain other FTAs, including those with Japan and South Korea, which Commerce Minister Piyush Goyal has said need to be more balanced and equitable.

Also Read: South Korea hoping to conclude FTA talks with India before possible state visit in 2024

According to Sitharaman, the Indian government is now negotiating FTAs from a position of strength and "with a different spirit".

"FTAs, the way we negotiate, the way we tighten the language with which you agree, and the way you put in clause which gives a window for them and for us to review…unless you do all this, your FTAs are not going to deliver the way you wish them to deliver," she said.