The Hindu : Business : Adopt cautious approach on rules of origin: study

Online edition of India's National Newspaper
Wednesday, Apr 12, 2006

Business

Business

Adopt cautious approach on rules of origin: study

`Factor in experience while signing new pacts'

NEW DELHI: India needs to adopt a cautious approach on free trade agreements (FTAs), while putting in place an effective monitoring and control system for Rules of Origin (ROO), a study has said.

The study, undertaken by the Tariff Commission on ROO that govern the determination of the country of origin of products for deciding the eligibility to concessional tariffs, has suggested a "moderate path'' approach followed by other countries in their preferential agreements.

Recommending a slow and steady approach, the study noted that such agreements (FTAs) need to be properly spaced out, so that lessons learnt from the implementation of one agreement can be utilised to improve upon the commitments to be given in the next one.

The study moots putting in place an effective monitoring and control system for ROOs as also introducing certain terms, principles and procedures into the Indian customs, income-tax and other definitions to give full effect to provisions of FTAs.

The report, `Rules of Origin — A Road for India,' authored by Sudhir Kumar, Resident Commissioner, Karnataka, points out that a strict and effective monitoring and control system on the country's exports and imports would have to be put in place."The process of consultation and review between India and the FTA partner country should be built into the agreement itself or under the ROO. and any circumvention, curbed and punished,'' — PTI

Delhi Special Correspondent writes:

Balanced approach needed: Jairam Ramesh

Meanwhile, Minister of State for Commerce Jairam Ramesh on Monday struck a note of "caution" and called for a "balanced approach" to FTAs as he felt that the country could not afford unbridled imports of commodities, especially in such sensitive sectors such as agriculture and textiles.

In an interaction with the Forum of Financial Writers (FFW) here, Mr. Ramesh said the issue had to be dealt with cautiously as FTAs fetched "macro benefits" for the country as a whole, but with some "micro pains" for certain sections of the people.

The need, therefore, was to adopt a balanced approach while bearing in mind the "long-term competitive advantage" in those sensitive sectors.

Explaining why the Government was going in for FTAs with individual countries as also certain trading blocs, Mr Ramesh said that certain decisions such as these agreements could not be looked at merely from the economic point of view. FTAs, he said, were being looked at as "an instrument of political influence".

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