Asean proposes separate negative lists
New Delhi, Dec 26, 2005 — Association of South East Asian Nations (Asean) has demanded that all its members should be allowed to maintain separate negative lists with India in the free trade agreement (FTA) being negotiated between the two sides. It, however, wants India to have a common negative list for all the 10 Asean members.
According to industry sources, this is an unreasonable demand as India would not settle for anything so unbalanced. “If Asean members want to give individual negative lists to India, then they should also be prepared for separate negative lists from India,” an official participating in the meetings of the trade negotiations committee said.
A negative or sensitive list has items which would not be included in the FTA and would, therefore, not have to undertake duty cuts. Recently, there was a hue and cry from Asean when India produced a tentative negative list of about 1,400 products. <>Sources pointed out that this list would automatically be pruned if India prepares separate negative lists for individual Asean members as the sensitive products would get distributed depending upon which product is sensitive for which country.
Trade experts, however, are of the view that Asean is unlikely to agree to such an arrangement as it would greatly limit the benefits it is expecting out of the FTA. They add that India should stand firm on its position that individual lists could be allowed only if it works both ways. The issue will be discussed in the meeting of the trade negotiations committee in February 2006. The negotiations are slated to be completed in June 2006 and the FTA is scheduled to be implemented from January 1, 2007.
Negating The Negative
• A negative or sensitive list has items that would not be included in the FTA and would, therefore, not have to undertake duty cuts
• While Asean seeks to be allowed to have separate negative lists with India in FTA, it wants India to have a common negative list for all Asean members
• Industry feels India would not settle for anything so unbalanced
• India's negative list would be pruned if it prepares separate negative lists for individual Asean members as sensitive products would get distributed depending upon which product is sensitive for which country
Asean includes Brunei, Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. Bilateral trade with ASEAN has gone up from $3.9 billion in 1993-94 to $16.8 billion in 2004-05 with the balance slightly in Asean’s favour. The FTA, which would at a later date be expanded to include services and investment, is expect to increase trade severalfold.
India has to be very careful in the FTA negotiations as Asean has proved to be a tough candidate so far. An early harvest scheme for the FTA had to be abandoned by both countries because of a disagreement on the rules of origin (ROO). Although the ROO problem has been more or less settled, the issue of negative lists remains to be amicably resolved.