India-Asean FTA final details to be worked out by negotiation panel

The final details on the India-Asean FTA will be hammered out by the Trade Negotiation Committee (TNC) before September 2007 so as to draw a broad framework for the launch of the free trade agreement early next year.

This would also enable the heads of Government of India and Asean when they meet in Singapore in November to give a political endorsement to the whole plan and iron out last-mile differences, if any.

Speaking to Business Line, Commerce Secretary Mr Gopal K. Pillai, who returned after taking part in the senior official-level meeting in Manila on August 25, said that on special products such as crude palm oil, refined palm oil, te a, coffee and pepper, India has reiterated its stance that it would not reduce tariffs any further.

Even as New Delhi has said that it would be reducing tariff from 100 per cent to 50 per cent over the years 2012 to 2022, Vietnam has argued that such slower pace of tariff reduction on tea, coffee and pepper would block 29 per cent of its trade with India.

On the other hand, Mr Pillai said, Vietnam has put 450 items in the highly sensitive track (HST), which also blocks 29 per cent of India’s trade with Vietnam.

“If we are giving 50 per cent duty cuts on the five special products, will Vietnam give similar cuts on so many items in its HST?”

Mr Pillai also said that Vietnam, while agreeing in principle, ahs promised to work out details and revert.

Barring the special products, negotiations on minor issues such as tariff lines under negative list, five-year standstill and special and differential treatment for Cambodia, Laos, Myanmar and Vietnam would be thrashed out as the deadline for reaching the agreement is September 30.

The FTA is already behind schedule by two years.

For some countries with already lower tariffs such as Malaysia, the pain of duty concession is less as compared to India, Mr Pillai said.

“When you enter into an FTA on the goods part, you have to face this but we will get it back when the services negotiations come, as we gain more in that area.”

On India’s liberal offer till date in any of its negotiations to Asean with no matching accommodation from the other sides, Mr Pillai said that there is a distinct geopolitical gain in forging an FTA with Asean.

“If you are not there, there are FTAs between Asean and China, Japan and Korea. These countries would trade on zero duty and take away the market and what we are exporting to Asean would come down further.