India, ASEAN talks on FTA in Manila by March-end
The Hindu | 26 March 2007
India, ASEAN talks on FTA in Manila by March-end
P. S. Suryanarayana
Aim is to clinch pact on goods by July: Commerce Secretary
– India likely to drop import duty on palm oil
– Singapore to gain greater market access in India
SINGAPORE: India and the Association of South East Asian Nations (ASEAN) will hold what may turn out to be an "almost make or break [talks]" for finalisation of their long-stalled free trade agreement (FTA). Senior officials from both will meet in Manila by March-end.
Indicating this, Union Commerce Secretary G.K. Pillai said here, after talks with Singapore officials during the weekend, that the objective was to clinch the proposed ASEAN-India pact with regard to goods, as different from services or investment, for signature by July.
Hanging fire for 3 years
Prime Minister Manmohan Singh and leaders of the 10-nation ASEAN had set the July timeline when they met at Cebu in the Philippines in January. The India-ASEAN FTA negotiations have been dragging on for nearly three years.
Mr. Pillai said the two sides, which held their latest round of consultations in Jakarta, had struck a "compromise" formula on most issues of tariff reductions and product range.
On the main sticking point, the ASEAN’s insistence of a near-total reduction of India’s import duty on palm oil, New Delhi had now offered to drop its earlier insistence on a "five-year standstill" with regard to the tariff, he said.
India’s revised proposal was to begin reducing the tariff from the first year of the FTA implementation. The duty could slide, gradually, to 50 per cent in 10 years, against 15 years under the earlier offer. India’s latest initiative over coffee and tea was comparable in scope.
The timeline for full benefits for both sides in respect of all agreed products would be 2018. There was no longer a dispute about India’s proposed negative list of goods with no tariff reductions through a trade pact. But, he said, "we have not sorted out [the] palm oil [issue]" fully.
Mr. Pillai said: "what we have offered ASEAN we are giving to Singapore" with effect from July.
This follows the latest firming up of a Supplementary Agreement on Goods under the existing India-Singapore Comprehensive Economic Cooperation Agreement (CECA). He had held talks with his Singapore counterpart Peter Ong in this regard.
Singapore would now gain a greater market access in India, and about 1,000 additional products may be so covered.
The latest "one-sided" concessions by India were designed to match the City-State’s long-standing reputation for free trade.
On trade in services under the CECA that came into effect in August 2005, Mr. Pillai said concerted efforts were now on to finalise the access to Singapore by Indian professionals in mutually agreed fields.
Direct investments into India from Singapore were of the "significant" order of $0.5 billion last year.
Asked whether Singapore investors still preferred the Mauritius route to India, in spite of the CECA, he said there might be cases of some firms "flying under the radar" of this pact so as to overcome the "conditions" stipulated by New Delhi.
Pact with Mauritius
In any case, New Delhi "is now renegotiating" its existing agreement with Mauritius on its status as a conduit for foreign investments into India.
This follows India’s loss of $1.5 billion as possible taxes with regard to a recent foreign investment deal, not involving Singapore, that took place through Mauritius.
