The Hindu : Business : PM admits to difficulties in concluding FTA

Online edition of India's National Newspaper
Wednesday, Nov 21, 2007
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Business

PM admits to difficulties in concluding FTA

Harish Khare

Demands from ASEAN nations could adversely affect farmers and certain crops

“Worries on key farm products”
“India’s concessions more liberal”

ON BOARD PRIME MINISTER’S SPECIAL AIRCRAFT: The chances of India signing a Free Trade Agreement (FTA) with ASEAN (Association of Southeast Asian Nations) appeared rather dim even as Prime Minister Manmohan Singh headed for Singapore on Tuesday to attend an India-ASEAN summit because of unreasonable “demands” that were being made on “some sensitive agricultural products.”

Differences

The Prime Minister told the media these demands from the ASEAN nations could “adversely affect our subsistence farmers and certain crops.”

Even as the pressure was building up on the Prime Minister to sign the FTA, there was opposition from within the government on this count.

According to informed official sources, Jairam Ramesh, Minister of State for commerce, has shot off a letter to the Prime Minister, pointing out drawbacks in the proposed FTA agreement.

In this communication, sent to the Prime Minister two days before he took off for the ASEAN summit, the junior Minister for Commerce has argued that “India’s offer of concessions in every category — normal track, sensitive track and highly sensitive track — is more liberal compared to that of Malaysia, Thailand, Indonesia and Vietnam. We are offering tariff concessions on a greater proportion of exports of these four countries to India, than we are getting in return.”

Mr. Ramesh has also cautioned against “a very liberal approach on rules of origin and value-added.”

He has also drawn attention to the imbalance: “India has agreed readily to the suggestion that while each ASEAN member country would submit its own separate list of sensitive list, India would submit a single such list for ASEAN as a whole.”

However, while the Prime Minister admitted to difficulties in concluding an FTA, he told journalists he was in favour of expanding and deepening the ASEAN process.

Kamal Nath optimistic

P. S. Suryanarayana writes from Singapore:

However, Union Commerce Minister Kamal Nath said India and ASEAN, which held informal consultations on the margins of the ongoing ASEAN-organised summits, decided to settle all outstanding issues by March next year.

Indicating this after holding talks with the ASEAN Economic Ministers, Mr. Kamal Nath told journalists that he was “optimistic about the agreement being finalised in terms of India’s policy of economic engagement in the (East Asian) region.”

Asked about the intractability of the outstanding issues, Mr. Kamal Nath said differences pertained mainly to the commodities basket — palm oil, tea, coffee, and pepper.

On petroleum products, he said the issue related mainly to Brunei. India’s tariff line on these products was only five per cent. And, as a major importer of petroleum products, India did not see the issue with the ASEAN in this domain as a “real market access” question. “I see convergence happening,” he said.

As the ASEAN Chair, Singapore Government echoed Mr. Kamal Nath’s optimism and indicated that only a few issues relating to preferential access for a few products still remained to be sorted out.

A view in ASEAN circles was that India’s willingness to settle the FTA issue “in terms of a policy of economic engagement” in East Asia was a code for new flexibility.

On the current stalemate in global trade talks, Mr. Kamal Nath said: “We are interested in the completion of this (Doha) round. India has got great stakes in the rules-based multilateral system, and the developmental content cannot be compromised. This round must correct the structural flaws in global trade, specially in agriculture, and we expect the United States to come forward on this in terms of their subsidies to agriculture.”

Asked about the Doha Round timelines being missed time and again, Mr. Kamal Nath said: “Timelines and deadlines are important, but bottom lines are more important.”

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