India gives away more market access to Asean

NEW DELHI: Indian negotiators who had tried to bargain a good deal with 10-member regional grouping Asean for the last six years finally gave away much more additional market access than their counterparts from the Asian regional trading bloc.

Though India’s and Asean’s offer to each other’s imports is similar at around 96% under the recently signed free trade agreement (FTA), India has actually given much more additional market access than what it got in return.

As about 75% of the Indian goods entering the Asean countries currently attract zero duties, the effective additional market access that India has secured out of the FTA with Asean is mere 21% of its export. In return, India has agreed to provide additional market access of about 75% imports from Asean bloc.

Though, no official in the ministry of commerce and industry, which spearheaded the talks has come on record to admit poor negotiation skills by the Indian team, officials in the ministry agreed in private that it could have been a far better deal.

Whereas both parties agreed to keep 489 items each out of the scope of tariff cuts, Indian negotiators agreed for one consolidated negative list of 489 items for all Asean countries put together, which means India has about 50 items in its negative list for each Asean country. In return, India conceded each individual Asean country to prepare a separate negative list of 489 items each according to each country’s sensitivity to Indian imports, the analysis has found.

According to the agreement, which will be implemented from January 1, 2010, duties will be eliminated on about 3,200 products by December 2013. For the rest 800 products, duty will be zero or near zero by December 2016.

As India has already signed the agreement for goods, without taking into account the services sector, its future power of negotiation on services sector is substantially reduced, an analyst working in a quasi-government organisation said.

“As Indian negotiators have agreed to allow zero duty imports on 80% of items from a large trading bloc like Asean, it will adversely impact India’s long stand on WTO against major duty reduction in agriculture and non-agricultural market access, or Nama sectors,” the analyst said in the condition of anonymity.

Whereas Kerala politicians including heavyweights from the ruling Congress initially opposed to the India-Asean trade pact as it would impact agriculture products from the state, the Left parties have now demanded a white paper on the impact of the pact, saying that it will adversely affect farmers and small industries.