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Asean-India FTA implementation to be amended to Jan 1, 2007

September 26, 2005

Asean-India FTA Implementation To Be Amended To Jan 1, 2007

From Nor Baizura Basri

VIENTIANE, Sept 26 (Bernama) — Asean’s economic officials have proposed to amend the implementation of Asean-India Free Trade Area (FTA) Agreement from Jan 1, 2006, to Jan 1, 2007.

Laos’ leader for the Senior Economic Officials Meeting (SEOM), Bounsom Phommavihane, said the Asean officials have agreed to delay the implementation from the specified date in the framework agreement which was signed in 2003 due to "no absolute understanding between both parties".

"In the consultation today, we (officials) had agreed to amend the date of implementation of the India-FTA as there was no convergence of understanding on the rules of origin (ROO) between the negotiators," he said.

"A proposal will be submitted to the Asean leaders during the consultation with India on Friday. However, it is subjected to the Asean leaders’ approval," he told reporters after the SEOM-India Consultations here Monday.

In order to get a good understanding on ROO, Asean officials have agreed to organise a workshop on ROO for negotiators from both sides to be held at the Asean Secretariat in Jakarta from Oct 7 to 9, 2005, he added.

ROO is a safeguard to prevent third countries from taking advantage of the FTA between two other countries and it is a vital component in any FTA as it determines the country of origin of products to be traded.

If a product does not satisfy the ROO criteria, then it is deemed as originating from a third country and cannot be traded under the FTA.

Bounsom said Asean had rejected India’s twin criteria of determining ROO which it generally uses in its various FTAs with other countries.

"After the workshop, we will continue to negotiate for room of origin, as well as finding the right solution for both parties in order to be able to establish the FTA," he added.

Among the proposals in the negotiations from India were the 40 percent domestic value addition in goods exported to India plus change in tariff heading to be imposed in the Asean-India FTA.

"We are OK with the 40 percent, but it is quite difficult for the change in tariff heading," Bounsom said.

A change in tariff heading criteria means that a particular good entering into an FTA member economy will go through sufficient value addition to become another good, which will attract a new tariff heading under the International Harmonised System of Customs classification before being exported to an FTA member.


 source: Bernama