The Hindu Business Line : Faltering on the FTA

The India-Asean summit, scheduled to be held later this month, will probably achieve a whole lot of things that will be good for the two sides. However, the run up to a Free Trade Agreement has been so tardy in recent weeks that the outlook in fact is decidedly bleak given the toughening stand of the Association of South-East Asian Nations on the negative list issue at the November meeting in Jakarta of the Trade Negotiations Committee.

What is raising New Delhi's angst is the Asean demand that India prune its negative list of tradable items to be covered by the FTA to just 173 from the 560 that are on offer. In fact, New Delhi's offer of 560 items has to be read with the fact that its initial list contained nearly 1,500 items which were then reduced to 864, thus indicating unambiguously that New Delhi was prepared to go down the road of compromise in the interests of the FTA. On the other hand, Asean has maintained its negative list (that is, Indian export items that will not be covered by tariff-cuts under the agreement) at 1,900 which, interestingly, is the same number of items in the negative list offered to China (also in negotiations for an FTA with Asean). The least one would have expected — if Asean were keen on signing an FTA quickly with New Delhi — was an improved offer on its negative list; this is yet to happen. However, the silver-lining in all this is that the apparent toughening of the Asean stand will in all likelihood lead to a delay in concluding the FTA, which, in the current circumstances, will be of advantage to New Delhi since the terms are not exactly to its advantage.

In fact, New Delhi has rightly made it clear that the interests of the agricultural sector cannot be sacrificed at the altar of the FTA, especially to the extent urged by the Asean exporting community. Take, for example, the palm oil sector where concessions have been made by offering lower import duties but which are not considered adequate by countries such as Malaysia and Indonesia. While the protection of domestic Indian interests is not negotiable beyond a point, certainly there is no bar on New Delhi stepping up pressure on Asean to agree to investment and services agreements that, on balance, can make the Indian position more comfortable in the event of the FTA being concluded.

More Stories on : Editorial | Foreign Trade

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Faltering on the FTA

Singur: Bengal must go ahead

No logic in shackling NBFCs

Are work-places really women-ready?

Retailing, continental style

Retail management

Manual typewriter to Microsoft

Oil prices

Financial inclusion