India-Asean sign FTA; create EU-like trading bloc

Prakash Chawla

Bangkok, Aug 13 (PTI) India and south-east Asian trading
bloc Association of South East Asian Nations (ASEAN) Thursday
signed a free trade agreement, which was in the making for six
years, to create a European Union-style single market that
will boost trade by USD 10 billion in the very first year.

The agreement, which would kick in from January 1, 2010,
would, over time, allow duty free trade of 4,000 products
ranging from steel to apparels to sugar and tobacco.

"Bilateral trade between India and Asean was more than
USD 40 billion... have set an ambitious target of achieving
bilateral trade of USD 50 billion by 2010... the current
agreement would help achieve this target," a Commerce Ministry
of India statement said Thursday.

The pact was signed here by India Commerce Minister Anand
Sharma and Economic Ministers of the 10-nation trading bloc.

The pact opens a 1.7-billion consumer market to the
member countries with a combined GDP of USD 2.3 trillion and
serves as a boost to trade hit by the global recession.

Under the trade pact, India has included 489 items from
agriculture, textile and chemicals in the negative list,
meaning these products will be kept out of the duty reduction.

Addressing concerns of domestic planters, black tea,
coffee, pepper and rubber have been included in the sensitive
list, which means duties will be cut on these only by 2019.
However, duty on these items at no time will be eliminated.

The FTA or trade in goods agreement focuses on traiff
liberalisation on mutually agreed tariff lines, with
flexibilities to address domestic sensitivities.

Farmers in south India, especially Kerala, fear lower
duty on plantation crops like coffee and pepper would lead to
a deluge of imports from Asean members like Indonesia and
Malaysia that could make domestic farmers vulnerable to
competition.

Sharma had said yesterday that the agreement is well
balanced and is in harmony with India's Look East Policy. "I
can say negotiations have been painstaking. The negotiators
have ensured that our sensitive areas where we had
concerns are fully addressed," he had said.

The official statement said the agreement also provides
for bilateral safeguard mechanisms to address sudden surge in
imports after the agreement comes into force. This means, in
the event of a surge in imports, safeguard duties may be put
in place for a period of up to four years.

The bulk of the trade between the two regions include
textiles, steel, processed food, plantation crops, iron and
steel, ready-made garments, chemicals etc.

Industry body FICCI, whose delegation accompanied Sharma,
said that the agreement would provide access to the large
Asean market to India.

India and Asean are also currently negotiating agreements
on trade in services and investment that are expected to be
concluded by December this year.

India's exports to Asean were about USD 17 billion in
2007-08 and imports USD 23 billion. PTI PC
DDC
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