India's Growing Economic Engagement with East Asia

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  1. angeldemon_007
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    angeldemon_007 SENIOR MEMBER

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    India's signing of comprehensive economic pacts with both Malaysia and Japan in the past few weeks is only the latest signal of how seriously the country is pursuing its 'Look East' policy. In a spate of recent regional engagements from Indonesia to Vietnam, Indian Prime Minister Manmohan Singh has made it clear that his government's foreign-policy priority will be East and Southeast Asia, regions poised for sustained growth in the 21st century.

    The Look East policy, initiated in 1991 by Prime Minister PV Narasimha Rao, has become the cornerstone of Indian engagement with the world's most economically dynamic region. After years of neglecting relations with its neighbors and being subject to Cold War constraints, the policy was designed to reinvigorate engagement with East Asia. Over the years, India has developed extensive economic and trade linkages with countries in the region, alongside a gradual strengthening of security ties.

    Twenty years later, the Asian strategic landscape is in turmoil, with India still 'looking east' to enhance its regional relevance - particularly in an effort to offset China's growing regional prowess. The standoff between Japan and China over a boat collision last year underscored the Communist state's now more aggressive stance against its rivals, as well as against states considered allies of the US. Buoyed by its political and economic rise, Beijing has begun dictating the boundaries of acceptable behavior to its neighbors, laying bare the costs of great power politics. In response, the US and its allies have already started re-assessing their regional strategies, and a loose balancing coalition vis-à-vis China has started to emerge.

    India looks to Japan…

    The rise of China in the Asia-Pacific and beyond has fundamentally altered the strategic calculations of India and Japan, forcing them to rethink their attitudes toward each other. As a result, Tokyo and New Delhi have made an effort in recent years to push Indo-Japanese ties into high gear, with India's booming economy making it an attractive trading and business partner for economically stagnant Japan. Japan is also re-assessing its role as a security provider in the wider region - and of all its neighbors, India seems most willing to acknowledge Japan's centrality in shaping the evolving Asia-Pacific security architecture. Moreover, a new generation of political leaders in India and Japan are changing the trajectory of Indo-Japanese relations by not being beholden to previous governments' (negative) attitudes.

    India's ties with Japan have come a long way since May 1998, when a chill set in after India's nuclear tests propelled Japan to impose sanctions and suspend its Overseas Development Assistance. Since then, however, the changing strategic milieu in the Asia-Pacific has brought the two countries together - so much so that the visit of the Indian prime minister to Japan last year produced the unfolding of a roadmap to transform a low-key relationship into a major strategic partnership.

    An Indo-Japanese civilian nuclear pact would be a pivotal indicator that the two countries intend to build a partnership to bring stability to the region at a time when China has been going all out to reward Pakistan with civilian nuclear reactors, thereby putting the entire non-proliferation regime in jeopardy . But as Japan fights to contain a nuclear disaster, it looks increasingly unlikely that either country will push for the deal in the near future. This in addition to the fact that Japan continues to insist that India sign the Non-Proliferation Treaty (NPT) and the Comprehensive Test Ban Treaty (CTBT). India has expressed no intention of doing so, given its long-held stance that the treaties are discriminatory toward the country.

    …and beyond

    In addition to Japan, India is also looking to enhance strategic and economic relations with other countries in the region. For example, trade was the focus of Prime Minister Singh's visit to Malaysia in November 2010. Having made a strong pitch for increased Malaysian investment in India, Singh and his Malaysian counterpart, Najib Razak, signed an array of agreements which galvanized bilateral economic cooperation and liberalized their respective foreign direct investment regimes . The security partnership between the two countries has been strengthened by the decisions to explore the possibility of collaboration in the defense sector, and to enhance cooperation in counterterrorism activities through information sharing, and the establishment of a Joint Working Group.

    Indonesia remains another key player in India's Look East policy, and has played a key role in enhancing India's ties with ASEAN. By offering Indonesian President Susilo Bambang Yudhoyono the role of Chief Guest in India's Republic Day celebration in January 2011, India underlined the need for greater India-Indonesia cooperation in the years to come.

    At the eighth ASEAN-India Summit in Hanoi last November, India made a strong case for its increasing relevance to the security and economic architectures of East Asia. India's 2010 Free Trade Agreement with ASEAN committed New Delhi to bringing down import tariffs on 80 percent of the commodities traded with ASEAN. This provides India with an opportunity to challenge China's growing penetration of East Asia, and helps prevent India's marginalization within the economically dynamic region. Having signed a free trade pact in goods, India and ASEAN are now engaged in talks to widen the agreement to include services and investments. India hopes to increase its $50 billion trade with ASEAN to $70 billion by 2012.

    India is indeed pursuing an ambitious policy in East and Southeast Asia, joining forces with smaller states in the region in order to offset China's growing dominance, as well as to dampen the effects of America's likely retrenchment from the region in the near future. It remains to be seen, however, if India can live up to its full potential.

    India's Growing Economic Engagement with East Asia | Oil Price.com