The Hindu Business Line : ASEAN summit to set direction for free trade agreement

The three-day tour of the Prime Minister, Dr Manmohan Singh, to take part in the ASEAN summit on January 13 at Cebu in the Philippines, is likely to pave way for providing "direction" to the stalled negotiations on the India-ASEAN Free Trade Agreement (FTA).

Sources in the Government told Business Line here that the FTA agreement, initially scheduled to have been in place in 2007, has been delayed owing to differences over the list of items for which India has conscientiously demurred to cut import duties.

Tariff Lines

Even as New Delhi has cut its negative list to 490 tariff lines from the initial list of 1,400, the 10 members of ASEAN have jacked up their negative list from the original 2,700 tariff lines to 6,200 with ASEAN unable to evolve a common ground on their negative list, the sources said.

According to the Director, Research & Information System (RIS) — a think-tank on policy set up by the Ministry of External Affairs — Dr Nagesh Kumar, ASEAN ought to take on board the concerns of agricultural commodities being imported to India under tariff concessions and the attendant fallout it would have on domestic farmers.

He, however, felt that "a middle ground" could be worked out to expedite the process of FTA and said the presence of leaders at the summit would help in breaking the logjam in negotiations.

Negative List

The sources said that the latest list of New Delhi commits it to prune its negative list as part of a larger package that offers to reduce duties from 80 per cent to 60 per cent on refined palm oil by 2022 and from 70 to 50 per cent on crude palm oil.

Some of 490 tariff lines standstill list for ASEAN-India FTA where no tariff concessions would be exchanged by India on the sensitive agriculture include, among others, marine products like cod, sardines, mackerel, trout, long finned tunas, yellow fin tunas, shrimps and prawns, lobsters crabs, butter, dairy spreads, natural honey, potatoes, peas, beans, sweet corn, onions, guavas, mangoes, lemons, broken rice, millet, grain sorghum, wheat, maize, rice flour, vanilla, nutmeg, cardamoms, copra, mustard seeds, cotton seeds, palm nuts and kernels, crude oil, cane sugar, beet sugar, beer made from malt and sparkling wine.

FTA Negotiations

Officials in the Commerce Ministry contend India's latest offer is the shortest New Delhi has ever presented to any bilateral partner in FTA negotiations. They say that while ASEAN wants all products to be included in the FTA, India has proposed that some products ought to be kept out of the FTA due to their sensitivity. India has further clarified that even Framework Agreement postulates coverage of "substantially all trade" and "not all trade".

Even in the earlier 560 tariff lines India offered before its latest offer, the Commerce & Industry Minister, Mr Kamal Nath, wrote in September 2006 to his counterparts in ASEAN countries to highlight that this offer covers 90 per cent of the tariff lines and 90 per cent value of India's imports from ASEAN.

Balance of Trade

He is reported to have pointed out that in import value coverage for ASEAN-Country-wise coverage for Cambodia and Lao is 100 per cent each. Coverage for Indonesia, Malaysia, Myanmar, the Philippines and Singapore is 95 per cent or more. Coverage for Brunei, Thailand and Vietnam is also 85 per cent or more.

They also point out that India's balance of trade has always been negative with ASEAN as its imports from ASEAN were higher than its exports.

In 2005-06, India exported $10,513.26 million worth of goods and imported $10,610.90 million from ASEAN, leaving New Delhi with a trade deficit of $97.64 million.

In 2004-05, India's trade gap with ASEAN was $688.78 million and in the previous year it was $1611.42 million.