The Hindu Business Line : India-Asean free trade pact to be delayed

Even as the Union Commerce and Industry Minister, Mr Kamal Nath, has said at the Association of South East Asian Nations (Asean) trade ministers meeting at Cebu on Thursday that Asean has agreed to India's proposal for maintaining a negative list of 490 items, the possibility of concluding a free trade area by the deadline of June 2007 would be unlikely to be adhered to.

Optimistic

Conference sources told Business Line here on Friday that the Secretary General of Asean, Mr Ong Keng Yong, told reporters in the Philippines that "it may be optimistic" to expect the deal to be wrapped up by June as the differences in dealing with tariff reductions was delaying the process. They said that a trade pact between India, the world's second most populous country and the 10-member Asean would vastly boost their $23.3 billion yearly trade. But the negotiations remained mired on agricultural products, which New Delhi sought to exclude from tariff cuts.

Agri products

Farm products remain by far Asean's biggest exports to the South Asian country. India in August 2006 reduced its negative list — item it wants to exclude from an accord — to 1,414 products, including rice, vegetable oil and petroleum gods.

Asean resented the exclusion, contending they accounted for 44 per cent of Asean's exports to India, 100 per cent of Brunei's exports to India and 99 per cent of Myanmar's. Hence, India further cut down the list to 490 items, Mr Nath said this in a statement at Cebu.

However, an official release issued here today by the Department of Commerce said during the meeting, there was "a broad consensus among the Ministers that Asean-India

FTA needs to be concluded early not merely for reasons of bilateral trade but also for larger strategic reasons.

"It was agreed that negotiations would mete and resolve the remaining outstanding issues preferably by July 2007".

That is why the Asean Secretary General expressed doubts about concluding an FTA by June 2007, the second delay in less than a year as the FTA was to have come into effect from January 2007, the sources said.