Photo Source: ASEAN.org
By: Trisha Ray, Columnist
When Prime Minister Narendra Modi announced India’s new Act East Policy in 2014, his statements were met with optimism about the prospect of the world’s largest democracy finally living up to its potential as a great power. The success of this turn is something of a question mark, however, as India and the Association of Southeast Asian Nations (ASEAN) continue to be plagued by a reputation for shying away from deeper engagement, especially if their autonomy is at stake. The lack of a formal document elucidating exactly what ‘Act East’ entails has also made judging its success a challenge. However, for the sake of security, and in order to pursue action that matches their rhetoric—that of India as an emerging power, and of ASEAN centrality—the two need to move beyond the touch-and-go diplomacy that has characterized relations so far.
Why Act East?
India and the countries of Southeast Asia have significant strategic and economic interests in building closer relations with one another. This realization has triggered India’s switch from a ‘Look East’ to an ‘Act East’ policy in order to deepen engagement with Southeast Asia in light of a belligerent China.[i] India’s Look East Policy began in 1991 as a way to engage strategically and economically with Southeast Asia to counter Chinese influence. Though it lacks a formal definition, the Act East policy is meant to reiterate India’s commitment to Southeast Asia.
Southeast Asia is emerging as, and will continue to be, the axis of several important developments over the coming decades. For instance, Vietnam and the Philippines have a direct stake in the South China Sea dispute and are looking to ASEAN for a peaceful resolution. The ASEAN economies will collectively become the fourth-largest market in the world by 2030, and the Trans-Pacific Partnership (TPP), if ratified by all parties, will integrate the trade of 12 countries that account for 40% of the world’s trade.[ii] [iii]
The 14th ASEAN-India Summit and the 11th East Asia Summit, both held in early September, were thus an opportunity for India, itself an important center of power in Asia, to assertively weigh in on the aforementioned issue areas.
The regions’ growing markets and proximity to each other should, intuitively, make for a fruitful Indo-ASEAN economic relationship. The India-ASEAN Free Trade Agreement, which came into force in 2010, was thus meant to usher in a new era of stronger economic ties, and by 2012, the two parties had reached a trade target of $79 billion.[iv] Yet in 2014, Indo-ASEAN trade stood at $67.8 billion and accounted for only 2.7% of ASEAN’s total trade and about 9.4% of India’s total trade.[v] [vi] In 2015, this figure dropped further to $58.4 billion (about 2.6% of ASEAN’s total trade). There is, of course, variation in India’s economic integration with different ASEAN member states. However, as a proportion of its partner’s trade, trade with India remains below double digits with each country in ASEAN.[vii]
The ASEAN nations and India have much in common in the strategic sphere. For instance, the two parties share an ambition of carving an autonomous space for themselves in the international system where they can maintain their sovereignty and autonomy. At the same time, as a consequence of a changing threat environment, these states cannot continue to distance themselves from great power politics.
The South China Sea dispute is an immediate threat to the security of several Southeast Asian countries. India too has a stake in maintaining freedom of the seas under the UN Convention on the Law of the Sea (UNCLOS) if it wants to secure trade with Southeast Asian nations. Naval cooperation could thus become the gateway to deeper strategic engagement with the region. Hints of this are visible, for instance, in India’s flourishing relationship with Vietnam. In 2014, India and Vietnam signed a Memorandum of Understanding (MOU) that opened up a line of credit for Vietnam to purchase defense equipment from India.[viii] The two have also had significant service-to-service cooperation (particularly naval cooperation).[ix] In addition to being necessary for trade, keeping the seas secure is also linked to the security of India’s energy sources. The Strait of Malacca, a major chokepoint through which an estimated 15.2 million barrels of oil pass through daily, is disconcertingly close to China’s claims in the South China Sea.[x]
The Future of the Act East Policy
India and ASEAN both place heavy emphasis on economic engagement, and that is therefore the area in which progress in relations between the two is most likely. However, as mentioned before, trade between the two is lower than one would predict given geographic proximity. Thus, India needs to engage bilaterally with the growing economies of ASEAN. It has, for instance, been deepening economic ties with Vietnam and trade between the two is expected to touch $20 billion in 2020.[xi]
India’s commitment to multilateral trade pacts is less certain. It is unlikely to join the TPP considering the agreement’s stance on intellectual property rights (IPR). While India has begun strengthening the domestic legal framework for IPR, it still has a stake in keeping IPR relatively weak. For instance, weak IPR would help India maintain its role as the “pharmacy of the developing world”.[xii] Similar issues have led to Indian hedging in negotiations surrounding the Regional Comprehensive Economic Partnership (RCEP).
In the realm of security cooperation, India needs to increase its naval footprint. Indonesia would be a useful partner in naval cooperation as it has become increasingly assertive in securing its seas, but there have not been high-level state visits between India and Indonesia since 2013; when Modi and Indonesian President Joko Widodo met on the sidelines of the ASEAN Summit in 2014, the discussions revolved only around trade and investment.[xiii] [xiv] However, if India sets about fulfilling its commitment to “Indo-Pacific security,” we may see it pursue stronger bilateral strategic engagement with other nations in Southeast Asia affected by the South China Sea dispute.[xv]
To fulfill the imperative of ‘acting east,’ India must deepen its engagement with the nations of Southeast Asia in ways that move beyond the relatively limited engagement that has marked its relations to date. There is sizable potential in cooperation between the parties, given their strategic and economic affinities. India may yet become a valuable partner in the region.
[i] Nay Pyi Taw, “India, ASEAN can be great partners: Modi”, Hindustan Times, November 12, 2014, http://www.hindustantimes.com/india/india-asean-can-be-great-partners-modi/story-EvYECobHDArNyyS4TUFBgP.html.
[ii] “ASEAN’s Bright Future: growth opportunities for corporates in the ASEAN region”, J.P. Morgan, accessed September 21, 2016, https://www.jpmorgan.com/country/US/EN/cib/investment-banking/trade-asean-future.
[iii] “TPP: What is it and why does it matter?”, BBC News, July 27, 2016, http://www.bbc.com/news/business-32498715.
[iv] Zachary Keck, “India, ASEAN celebrate 20th Anniversary with two FTAs”, The Diplomat, December 21, 2012, http://thediplomat.com/2012/12/india-asean-celebrate-20th-anniversary-with-two-ftas/.
[v] “Top ten ASEAN trade partner countries/regions, 2014,” ASEAN Statistics, accessed September 21, 2016, http://www.asean.org/storage/2016/01/statistic/table20_asof121Dec15.pdf.
[vi] Calculated using data from MIT’s Observatory of Economic Complexity (OEC). See “India,” OEC, accessed September 19, 2016, http://atlas.media.mit.edu/en/profile/country/ind/.
[vii] This includes its immediate neighbor Myanmar. India accounts for 9.2% of its exports. See “Myanmar,” OEC, accessed September 19, 2016. http://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/mmr/show/all/2014/.
[viii] “Agreements/MOUs signed during the State Visit of Hon’ble President to Vietnam (15 September 2014)”, Ministry of External Affairs, Government of India, last modified September 15, 2014, http://mea.gov.in/bilateral-documents.htm?dtl/23996/AgreementsMoUs+signed+during+the+State+Visit+of+Honble+President+to+Vietnam+15+September+2014.
[ix] “Joint Statement between India and Vietnam during the visit of Prime Minister to Vietnam”, Ministry of External Affairs, Government of India, last modified September 3, 2016, http://www.mea.gov.in/bilateral-documents.htm?dtl/27362/Joint_Statement_between_India_and_Vietnam_during_the_visit_of_Prime_Minister_to_Vietnam.
[x] Jeremy Bender, “These 8 narrow chokepoints are critical to the world’s oil trade,” Business Insider, April 1, 2015, http://www.businessinsider.com/worlds-eight-oil-chokepoints-2015-4 .
[xi] “India-Vietnam trade may to $20 billion by 2020: Thanh,” Economic Times, January 13, 2015, http://economictimes.indiatimes.com/news/economy/foreign-trade/india-vietnam-trade-may-rise-to-20-billion-by-2020-thanh/articleshow/45866553.cms.
[xii] Kyla Tienhaara et al, “Is India holding the line against another TPP?”, East Asia Forum, May 20, 2016, http://www.eastasiaforum.org/2016/05/20/is-india-holding-the-line-against-another-tpp/.
[xiii] Indonesia’s interests are primarily in protecting its fishing industry, and in doing so they have even blown up Chinese fishing vessels. See Nick Wadhams and Bill Faries, “Blowing up boats sets Indonesia’s scarce fish swimming again,” Bloomberg, September 18, 2016, http://www.bloomberg.com/news/articles/2016-09-18/blowing-up-boats-sets-indonesia-s-scarce-fish-swimming-again.
[xiv] “India-Indonesia Bilateral Relations”, Embassy of India, Jakarta, accessed September 23, 2016, http://www.indianembassyjakarta.com/index.php/2013-05-20-10-02-04.
[xv] “Ensuring Secure Seas: Indian Maritime Security Strategy,” Integrated Headquarters, Ministry of Defense (Indian Navy), 2015, accessed June 9, 2016, http://indiannavy.nic.in/sites/default/files/Indian_Maritime_Security_Strategy_Document_25Jan16.pdf.