Free Trade Talks May Not Make Headway At East Asia Meet

NEW DELHI: Negotiations on the India-Asean free trade agreement (FTA) are unlikely to witness any progress at the third East Asia Summit (EAS) beginning next week in Singapore. Prime Minister Manmohan Singh, who will represent India at the summit, has been briefed by the commerce department on the current impasse in negotiations.

The main area of differences between the two sides is the degree of market access being offered by India on four agriculture products including palm oil. Sources said that there was very little which could happen at the EAS on the bilateral pact at this juncture other than a declaration by both sides on their intention to conclude the negotiations as early as possible.

At the second EAS in Philippines in January this year, it was being hoped that the negotiations on the FTA between India and Asean would be wrapped up by the next summit in November. Although things progressed steadily with the finalisation of sensitive list of items from both sides, the talks got stuck over the issue of market access for palm oil, pepper, coffee and tea.

While India has already agreed to bring down duties on all four products to 50% from the levels existing at the time when negotiations began, Asean wants more. It has demanded that India should bring down custom duties on palm oil to 30% and on tea, coffee and pepper to 20%.Speaking to ET, sources said that India had offered as much market access in the four sensitive products as it could, and it was not possible to budge further.Even if India agrees to go a little further, it would be impossible to open up to the extent the Asean members want. “We have our farmers to protect. How can we forget about their interests in order to get a pact off the ground,” the source said.

The East Asia Summit members comprise the Asean + 3 countries (which includes the then Asean members and China, Japan & South Korea), India, Australia and New Zealand. The third summit is scheduled to begin on November 21.

The framework for a comprehensive economic cooperation agreement (CECA) between India and Asean was signed way back in October 2003 during the second Asean-India summit. The idea was to move towards a free trade regime for trade in goods, services and investment. The Asean, however, insisted that a trade pact for goods should be signed first following which negotiations on services and investments should begin.