Hurdles galore on road to FTA with Asean
Economic Times | 29 January 2007
Hurdles galore on road to FTA with Asean
AMITI SEN
NEW DELHI: While the government’s decision to reduce import duty on palm oil could be interpreted as India’s signal to the Asean about its seriousness to sign the proposed free trade agreement (FTA) in July, several issues need to be settled before the deal is through. The trade negotiations committee, which will meet next month, has the tough task of arriving at a consensus on two contentious issues.
Asean wants India to increase the number of items on which it would reduce duties to zero. It also wants the country to bring forward the end-date by which tariffs on highly sensitive items including palm oil, tea and pepper is reduced to the mutually agreed level.
Speaking to ET, an official source said that of the 700 items India has agreed to reduce to 0%-5% by 2018, it has proposed to make 70 items duty-free. “The Asean group wants India to have more items in the duty-free list. India is not keen to do that,” the official said. The source added that while India could increase the zero-duty list by a few more items, it did not have too much flexibility.
Another area where some problem is anticipated by negotiators is on the 2022 date set by India for bringing down tariffs on the highly sensitive items including palm oil, pepper and tea to 50%. Malaysia and Indonesia, which are the primary exporters of palm oil to India, are keen that India should advance the date to 2012.
Officials said that while it is not possible for India to advance the date by 10 years, it could explore the option of advancing it to 2017 if the Asean members are accommodate India’s interests in other areas.
India and Asean have set a deadline of implementing the proposed FTA by July this year. A ministerial meet has been planned in Singapore in July, where the deal is to be signed.
After months of hard-nosed negotiations, the Asean has finally agreed to India’s proposal of maintaining a negative list of 490 items. Negative items are the ones which are not excluded from the tariff cuts agreed to in a bilateral agreement. Asean members have offered to match India’s offer on the negative list.
Meanwhile, India’s unilateral decision to reduce duty on crude palm oil, crude palmolein and other fractions of crude palm oil from 70% to 60% and on refined palm oils from 80% to 67.5%, would surely do its bit to appease Asean members.
