The Hindu Business Line : ‘India-Asean free trade pact launch in Jan or June’

New Delhi, Aug 8 After protracted parleys and two missed deadlines in 2005 and 2007, the India-Asean Free Trade Agreement (FTA) would be out of the drawing board to be launched either on January 1 or June 1, 2009 with the wrapping up of ‘a package’ by overcoming the last-mile glitches in Brunei on Thursday.

Disclosing this to Business Line here on Friday, the Commerce Secretary, Mr Gopal K. Pillai, who attended the Senior Economic Official Meeting (SEOM)-India, said that the issue of palm oil, margin of preferences and import duty cut on crude oil (petroleum) were all amicably settled.

Palm oil issue

He said that on the issue of palm oil, it was agreed that India would bind its import duty under the highly sensitive list to 37 per cent for crude palm oil (CPO) and 45 per cent for refined palm oil (RPO) by 2018. Other items such as coffee and tea import duty would be slashed from 100 per cent to 45 per cent and in the case of pepper from 70 per cent to 50 per cent by 2018.

It is altogether another story that India has cut the applied tariff on crude palm oil (including crude palmolein) from 20 per cent to nil and on RBD palm oil (including RBD palomolien) from 27.5 to 7.5 per cent on April 1, 2008 as part of its anti-inflation strategy and to ensure domestic availability of supply.

Mr Pillai said that Malaysia also dropped its insistence on zero duty for petroleum. He said the final package that emerged covers trade liberalisation in goods encompassing 80 per cent tariff lines and 75 per cent of total trade, which are all normal track.

Exclusion list

“We have five per cent tariff lines which would be under exclusion list” he said adding that each party would ensure that no other party would be adversely hit or significantly disadvantaged by its exclusion list.

He said that whatever is not there in the normal list or highly sensitive list would go to the sensitive list where tariffs would be brought to five per cent by 2015 and from those lines the efforts would be to bring certain percentage of it to zero duty by 2018.

Mr Pillai said that the package agreed with the Asean would be put before the Ministerial meeting to be held in Singapore on August 28, where the Union Commerce and Industry Minister, Mr Kamal Nath, and his ten counterparts of the Association of South East Asian Nations would broadly ‘endorse’ the package. This would be followed by vetting of the 1,000-page text by legal experts so that the whole deal of the FTA would be presented to the heads at a summit meeting of Asean and India on December, 17.

Asked whether the failure of talks under the WTO would have prompted both the parties involved to stitch a deal for freeing their trade in goods, Mr Pillai said “ India-Asean FTA proposal started around the same time when the WTO’s Doha Round in 2002. The FTA with Asean got settled, without going the same way of the WTO talks”.

‘Acceptable’

On the two deadlines for launch of the FTA, Mr Pillai said that the ten countries have to get the package approved by their respective legislative bodies and both the deadlines are “acceptable to us”.

To a specific query as to the delay in finalising the comprehensive partnership agreement (CEPA) with Sri Lanka after the success of the free trade agreement, Mr Pillai said that Sri Lanka sought extension as it is in the process of consulting with all the stakeholders for a consensus since the CEPA would deepen and widen the ambit of FTA by including trade in services, investment and economic cooperation.

He said that hopefully in a month and a half, this would be over.

He said that India’s proposed FTA with South Korea would be ready by October.