Financial Express | May 06, 2008
India-Asean FTA faces hurdle at Indonesia end
Arun S
New Delhi, May 5 — The “last mile” talks on the proposed Free Trade Agreement between India and the 10-member Association of Southeast Asian Nations (Asean) has been further stretched with Indonesia continuing to stick out as the sore thumb. At the final stage ministerial-level discussions held at Nusa Dua in Indonesia during the last weekend, negotiators from India and Indonesia once again failed to resolve the dispute over their respective increased market access demands.
The talks for the proposed FTA had begun three years ago. While Indonesia has been pressing for more access for their palmoil exports to India, New Delhi has pressed for allowing greater access for exports from several sectors from India to Indonesia. Indonesia is a major palmoil producer and the product comprises around 35% of their total shipment to India.
Recently, it had reportedly overtaken Malaysia to claim the top spot in the world’s palm oil production category. In the early stage of the FTA talks, Malaysia had raised its objections on greater access for its palmoil exports to India and had even warned that it would not sign a pact if India did not meet its demands. It had also more access for its rubber, coffee and tea exports.
“Overall, there has been a positive movement. But Indonesia has to make further adjustments. We have asked them to rework their (negative) list as they have not met the threshold. We hope they come back quickly,” an official said. India-Indonesia bilateral trade in 2006-07 grew 41% to $6.1 billion, with Indonesia’s exports to India contributing $4.1 billion of it.
The next meeting would take place in June though the venue had not yet been finalised, sources said, adding that the agreement would be finalised by this year-end.
The contentious issues included import duty cuts regarding four products (palmoil, pepper, tea and coffee) put forward by three countries (Malaysia, Indonesia and Vietnam). However, official sources said “the difficulties regarding Malaysia and Vietnam has been more or less settled.”
Earlier, India had agreed to reduce duties on refined palmoil from 90% to 60% and on crude palmoil from 80% to 50% by 2018. However, Indonesia and Malaysia, together supplying about 70% of India’s edible oil, had pitched for an additional cut in tariffs to 40% for refined palm oil and 30% for crude palmoil. Thailand and Vietnam had asked for more duty cuts on tea, black pepper and coffee. The list of sensitive products would be reduced to 5% by 2015 from the present 15%. Both sides have agreed not to cut tariffs on goods in a negative list of 489 items (5% of the bilateral trade).