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India, ASEAN sign pact on free trade

By Amit Baruah

NUSA DUA (BALI) OCT. 8. Taking their cooperation to a new level, India and the Association of South East Asian Nations today signed three accords, — a framework agreement towards a free trade area by 2011, a joint declaration against terrorism and New Delhi's accession to the ASEAN Treaty of Amity and Cooperation (TAC).

The documents were signed soon after the Prime Minister, Atal Bihari Vajpayee, and leaders of the ASEAN-10 met for the formal ASEAN+India summit. A working lunch attended by the 11 Heads of State/Government preceded the summit meeting.

In his statement at the summit, Mr. Vajpayee floated the idea of a broad Asian Economic Community, which would include the ASEAN-10 China, Korea, Japan and India. Such a grouping could be a new engine of growth.

Mr. Vajpayee came close to an "open skies arrangement" with ASEAN announcing that all designated ASEAN airlines were free to have daily services to New Delhi, Chennai, Kolkata and Mumbai, without a prior bilateral agreement.

He also offered ASEAN airlines an unlimited number of flights to another 18 tourist destinations in India. The Prime Minister proposed an India-ASEAN car rally — from Guwahati in Assam to Hanoi in Vietnam — an idea which was well received by other ASEAN leaders.

The Foreign Secretary, Kanwal Sibal, told presspersons that the three accords gave "greater content and depth" to India's "Look East" policy first enunciated by the former Prime Minister, P.V. Narasimha Rao.

Tariff concessions

The framework FTA has a built in "early harvest programme" which will start from November 1, 2004. The exchange of tariff concessions and elimination of tariffs on an agreed common list of 105 items based on full reciprocity between India and ASEAN-6 (Singapore, Thailand, Indonesia, Brunei, Malaysia and Philippines) will take place within three years.

"While India will remove tariffs on these items within three years for Cambodia, Laos, Myanmar and Vietnam (CLMV) they will do so for India in six years," an official note said, pointing to the concessions India was offering to less developed members of ASEAN. Separately, New Delhi will offer unilateral tariff concessions to CLMV nations on 111 items based on their levels of development to improve their market access to India.

Negotiations on the FTA in goods will commence from January 2004 and will conclude by June 30, 2005. Tariff reductions will begin from January 1, 2006, the official note said.

India will eliminate tariffs in 2011 in Brunei, Cambodia, Laos, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam. In turn, Brunei Indonesia, Malaysia, Singapore and Thailand will eliminate duties for India in 2011 while the CLMV nations will do so in 2016 for India. The negotiations for FTAs in services and investments are to commence in 2005 and conclude by 2007.

Mr. Sibal said the FTA framework had been negotiated in a record 10 months and revealed the goodwill and flexibility on both sides. He pointed out that ASEAN and China had taken three years to negotiate their FTA framework.

A Trade Negotiation Committee has also been set up to negotiate rules of origin, the modalities for tariff reduction and the FTA. It will begin negotiations in January 2004.

Fight against terrorism

According to Mr. Sibal, the joint declaration for combating international terrorism identified the main areas of cooperation as: information exchange, cooperation in legal matters, free cooperation in enforcement matters as well as document and identity fraud.

The joint declaration was modelled on an existing accord between ASEAN and the United States. It was made possible because ASEAN and India did not get bogged down on issues such as the "root causes" of terrorism. The Foreign Secretary said the joint declaration had special significance since it was signed in Bali — the scene of the October 12, 2002, blast that killed 202 people. Referring to the TAC, he said India's accession to the TAC was an additional step forward in its "Look East" policy. "It is reflective of our desire for fostering closer cooperation with ASEAN as well as our determination to cooperate in the maintenance of peace and stability in South-East Asia."

The Treaty, he said, was a "political step" to foster close and comprehensive cooperation between India and ASEAN. It was also compatible with the United Nations Charter and the five principles of Panchsheel.

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