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India set to conclude FTA with Asean

business Updated: Nov 21, 2007 18:21 IST

IANS
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India announced on Wednesday it was set to conclude a long-awaited free trade agreement (FTA) with Asean by early next year, with differences over preferential access confined only to a handful of products.

Both sides have agreed to settle these issues by March 2008 with a view to concluding the FTA in goods by May 2008, Indian Commerce Secretary GK Pillai spoke in Singapore on the sidelines of the India-Asean Summit.

Pillai's comments came a day after economic ministers of Asean and India held informal consultations Tuesday.

Pillai said the issues now pending for settlement included differences over tea, coffee and pepper that are almost wholly exported to India only by Vietnam from the 10-member Asean grouping, and palm oil, which is produced by Malaysia and Indonesia.

The two sides had agreed upon what is known as a Normal List, under which 80 per cent of goods would attract zero tariffs over a period of time, and also a Sensitive List, where five percent of tariff rates would apply.

Under the Negative List, there will be no tariff cuts on 489 items. These cover just five percent of the India-Asean trade.

Pillai indicated that even the differences with Vietnam, Indonesia and Malaysia over palm oil, tea, coffee and pepper had narrowed considerably.

The row over Brunei's export of petroleum -- constituting just one percent of India's fuel imports -- had also been settled for all practical purposes, he said.

"Between now and March 2008, we will have informal consultations," Pillai said, adding both sides would show flexibility.

He added that there had been domestic pressure in India "here and there" on the tariff cuts demanded by Asean. "We hope to close the deal by early next year," he said. "We are more or less seeing the end of differences."

Pillai pointed out that China had concluded a FTA in goods with Asean and was negotiating one on services. Similarly, Japan and South Korea had concluded FTAs on goods and services respectively with Asean.