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Indo-Asean FTA to go live from Jan 2007

M. Ramesh

Some leeway on value addition norms, change in tariff heading

Chennai , March 17

Indo-Asean free trade agreement is expected to go live on January 1, 2007, said Mr Rajan Sudesh Ratna, Director-Regional & Multilateral Trade Relations, Department of Commerce, Government of India.

On two issues that were holding up negotiations - value addition norms and change in tariff heading - India has made some concessions.

Earlier, India had wanted 40 per cent value addition (as in the case of the FTA with Thailand,) but for the Indo-Asean FTA India has agreed to a 35 per cent norm.

Secondly, India had wanted change of tariff at four-digit level, but has now relented to six-digit level. (This relates to the extent to which a product has to undergo a change, such as steel into an auto component. The higher the digit, the more the transformation.)

No early harvest

Now, the ensuing negotiations would be on the items that would be included in the FTA. Mr Ratna said there would be no `early harvest scheme' - list of items that would be quickly put under the agreement, even as negotiations are going on over the full range of the agreement.

Under the agreement, India will eliminate tariffs in 2011 for all Asean countries except the Philippines, as will these countries for Indian products. India and the Philippines will eliminate tariffs for each other on a reciprocal basis by 2016.

Mr Ratna said negotiations had also begun on investment and services.

But there are still some issues in the Indo-Asean agreement. For example, allowing `profit' to be included in the `value addition' is objectionable, according to Mr S.K. Hazari, President, India Indonesia Business Association.

Anybody could put a large element of profit into the product and call it value addition, Mr Hazari told Business Line today.

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