India, ASEAN FTA to be signed by July
India Infoline News Service / Mumbai Jan 15, 2007
India, ASEAN FTA to be signed by July
The two sides agree that the negative list will not exceed 5% of trade. On all the other items that make up 95% of the trade there would be either elimination or reduction of duties
The much-delayed Free Trade Agreement (FTA) with ASEAN could see the light of day sooner rather than later. Over the weekend, the two sides agreed on the broad contours of the agreement, which is expected to be signed by July, Commerce Minister Kamal Nath announced on Sunday.
Speaking to the media after the conclusion of talks with leaders of ASEAN at the tropical Philippines resort of Cebu, Nath said that the two sides had agreed to have a list of products that would not be subject to any tariff cuts till 2022.
The negative list will not exceed 5% of India’s total trade with ASEAN countries. Likewise, ASEAN will have a negative list which will not cross 5% of its trade with India. On all the other goods that would make up 95% of the trade, there would be either elimination or reduction of duties.
India is expected to bring into this list some 490 items that include rubber and coconut. In addition, India has offered to cut tariffs on about 700 manufactured items to 0-5% over the next 10 to 15 years.
Besides the negative list of 490 products, India has offered to gradually reduce tariffs on politically-sensitive items like palm oil, pepper and tea. India is willing to offer tariffs of 50-60% on these items by 2022. At present, tariffs on these items range from 90-100%.
Nath said that apart from the negative list, the two sides have to pay attention to some highly sensitive items, like palm oil, for which a compromise formula will be worked out. Palm oil forms 20% of India’s imports from ASEAN. India imports US $1.7bn worth of crude palm oil annually from Malaysia and Indonesia.
"When we exclude palm oil, we are offering 90% of the traded items in the normal track for reduction in duties," he said.
"For India and the ASEAN, a free trade agreement, which implies a greater engagement in the economic area, both in trade and investment, is vital," the Commerce & Industry Minister said.
"The mass of economic activity is slowly shifting to Asia, both in terms of competitiveness and the growth in the manufacturing sector. It is important, therefore, that East Asian countries engage with one another not only with greater intensity but in more creative ways," he added.
