China has replaced the US as Japan’s largest trading partner. With its deepening economic presence in the Korean peninsula and the prospect of Beijing becoming the subcontinent’s largest trading partner, a Sino-centric Asia is now close to reality.

While Indian analysts, obsessed with the US, debate Asia in old terms, for much of the region China is the principal point of reference in economic and political domains.

India’s ASEAN crisis

India’s trade with ASEAN is also growing, but from a much lower base and at a slower pace. India and the ASEAN have set a target of $ 30 billion for bilateral trade by 2007. India’s immediate problem has less to do with numbers but the deepening crisis in the free trade talks with the ASEAN. At the last round of the meetings in December 2005 at Kuala Lumpur, ASEAN officials publicly ridiculed the long list of nearly 1400 items that the Indian Commerce Ministry proposed to exclude from free trade.

Dr Singh stepped in to assure ASEAN leaders that India is serious about free trade and promised to conclude the negotiations by end 2006. Internally, Dr Singh put enormous pressure on the system to demonstrate flexibility.

While India has brought down the negative list to about 500, it insists on dealing with palm oil, a major export item from ASEAN, separately. ASEAN wants India to reduce its negative list to about 170-odd items. With talks going nowhere, ASEAN has apparently threatened to increase its own negative list to about 1,000 items.

... contd.