logo logo

FTA stalemate derails plan for Malaysian pact

Economic Times

FTA stalemate derails plan for Malaysian pact


JULY 19, 2006

NEW DELHI: The standoff between India and the Asean over the proposed Free Trade Agreement (FTA) has started rubbing over to India’s bilateral relations with individual Asean members.

India and Malaysia, which were actively exploring the possibility of entering into a comprehensive economic co-operation agreement (CECA), have now put the idea on the backburner.

No action has been taken so far on the recommendations of the joint study group (JSG) which had proposed that a CECA liberalising the market for goods, services and investment would be feasible and mutually beneficial in expanding bilateral economic linkages.

The decision to set up the JSG was taken by Prime Minister Manmohan Singh and his Malaysian counterpart Dato Seri Abdullah in December ’04. Speaking to ET, a member of the JSG said that while the report was submitted more than two months back, the commerce ministry had not initiated further action on the proposals.

“It seems that things are stuck because of the current stalemate over the India-Asean FTA. Till things move there, it is doubtful if any movement will happen in the proposed bilateral agreement,” the member said.

Malaysia and Indonesia are the two countries in the 10-member Asean which are most upset with India over its refusal to exclude palm oil from the negative list of items in the proposed FTA. The countries are so keen to get duty-free access for palm oil in India’s market that they rejected India’s offer of granting access to the product through tariff rate quotas (TRQs).

According to the India-Malaysia JSG report, that there is ample potential for bilateral trade expansion in a mutually beneficial manner for which adequate institutional mechanism needs to be put in place. In services, the JSG said that trade can be expanded though strengthening co-operation and collaboration activities in medicine, health care & diagnostic, advertising, audio-visual, financial, transport and accounting & taxation services.

In the area of investment, the JSG proposed that the CECA should cover three main areas: investment liberalisation, promotion and facilitation. For liberalisation of investment, the general principle of non-discrimination should apply and the standard of treatment should cover national treatment and most-favoured-nation treatment.

 source: Economic Times