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There is a glimmer of hope at last about the India-Asean free trade agreement, which should have been implemented, first by 2005 and then again by 2007. The two deadlines were missed because of what was described as intractable problems between the two sides. That there is great optimism all around about the agreement, which may be reality either by January or June next year, suggests that the old problems have been settled.

Clearly, there can be no better news for India and Asean given the huge potential for bilateral trade which in 2006 touched $28.7 billion, placing India eighth in Asean’s list of trading partners. Given the experience of FTAs with partners such as Sri Lanka and Thailand the expectation is that bilateral trade in goods with the Asean grouping will expand even faster, while the hope is that domestic businessmen will gain at least as much as their Asean counterparts. This, in fact, is what should be the goal of any sensible free trade deal. Reports following the Brunei meeting of senior officials from the two sides have focussed on some of the details of the agreement, the emphasis, not surprisingly, being on the four highly sensitive products (from the Indian perspective), namely, crude and refined palm oil, pepper, tea, coffee. From what officials in New Delhi have said, it appears that India has made concessions on each item, that on palm oil being, admittedly, with regard to bound rates (a reduction to 37 per cent for crude palm oil and 45 per cent for the refined variety by 2018). It is another matter that the current import duties (or applied rates) are zero and 7.5 per cent respectively after the government slashed the rates to contain domestic inflation. On coffee and tea the import duty will be reduced to 45 from 100 per cent and on pepper to 50 from 70 per cent within the same period. But what have the Asean countries offered, apart from Malaysia dropping its insistence on zero import duty for Indian petroleum imports? Has Indonesia, for example, agreed to drop to zero the import duties on 80 per cent of its total traded products with India? Or, has the market access for Indian products such as automobile components and some farm items been improved?

Among other things, it should be remembered that, in the past, an important reason for the slow progress on the agreement has been the intransigence of countries such as Malaysia and Indonesia in conceding ground in areas of interest to them. It is of course to be expected that the give-and-take has been fair and equitable, but New Delhi would do well to put all the concessions made by both sides on the table so that any doubts on the overall fairness of the deal can be given a decent burial. The point is that Asean is no SAARC, and New Delhi should not be seen to be making all the sacrifices to attain the goal of liberalised trade with one of the world’s strongest economic groupings.

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