The Hindu Business Line : Asean-India trade talks in a ‘make-or-break phase’

Singapore, Aug. 14 India and the 10-member Association of South East Asian Nations (Asean) are entering a critical phase of “make-or-break” trade talks at the political level.

The Union Commerce Minister, Mr Kamal Nath, will confer with his Asean counterparts in Manila on August 26. The meeting was programmed under the association’s schedule of annual events. However, the leaders are expected to address the issues which have held up the finalisation of an Asean-India FTA on goods, in the context of their often-contentious parleys for over three years. The talks have never been broken off, though.

Missed deadline

A new sense of urgency has arisen after the two sides missed the July-end deadline to reach an accord. The now-missed timeline was set by the Prime Minister, Dr Manmohan Singh, and the Asean leaders at their summit at Cebu (the Philippines) last January.

The Asean, in a renewed bid now, wants to explore the possibility of firming up the FTA with India in time for their exclusive summit in Singapore in November.

The Commerce Secretary, Mr G.K. Pillai, said over the telephone, after his visit to Kuala Lumpur over the week-end, that negotiations with the Asean “are continuing” over a cluster of “outstanding issues.” Six Asean countries were yet to give India their negative lists and catalogues of sensitive items.

Tariff sops

Asked about the latest Asean move to press India for tariff sops over its imports of petroleum and the related refined products, Mr Pillai posed the question whether the demand was that the duty, at only five per cent on these items in New Delhi’s sensitive list, be reduced to zero. India would have to reckon with huge revenue implications if it were to respond to the Asean in this fashion, he noted. However, India “can look at” the case of Brunei, whose petroleum exports defined its trade coverage.

The Asean Secretary General, Mr Ong Keng Yong, told Business Line that it was a new perception among some member-states that India was being “protectionist” about its imports of petroleum and related products. The Asean had earlier reckoned that these items too would be covered by the blanket principle of trade liberalisation.

Noting, however, that some Asean countries were way ahead of others in their collective talks with India, Mr Ong indicated that those lagging behind had now been asked to place all their cards, including their exclusion lists, on the table. “We are chasing them,” he remarked.

Positive signals

Talks on palm oil, a staple export item for some Asean countries including Malaysia, as also on coffee, pepper, and several other commodities have often rocked the negotiations. Now, with petroleum products becoming an issue, too, some other official sources said that “political will” and “a package approach” would be essential to clinch a deal.

The accomplished China-Asean trade deals dominate the political landscape. As a result, a view gaining ground in this region is that New Delhi’s feat of signing the Comprehensive Economic Cooperation Agreement with Singapore and a trade accord with Thailand may serve as positive signals for an early Asean-India deal.

Equally important, India and Malaysia have just now agreed to start negotiations by January 2008 for a bilateral economic pact.