India and Japan have decided to expedite negotiations on a comprehensive economic pact, besides cooperating on multilateral trade talks under the WTO.

Indian Commerce Minister Kamal Nath and his Japanese counterpart Akira Amari, meeting in New Delhi, discussed the trade pact and asked officials to complete talks within the stipulated time, according to an official release dated July 3, 2007.

Differences remain, however, on coverage of trade in goods and services and investments in the Comprehensive Economic Partnership Agreement (CEPA). At a meeting last week, New Delhi demanded extra safeguards for its domestic industry, which were opposed by Tokyo.

Indian negotiators wanted double protection to prevent misuse of the trade pact -- through rules of origin and tariff classification -- but their Japanese counterparts wanted to have only one of the options.

Under rules of origin, an item will enjoy duty concessions under CEPA only if an agreed percentage of value-addition is done in either of the countries.

Under tariff classification, an item gets different duty concession treatment every time any value-addition is done.

India has said it cannot give differential treatment to Japan since these issues have been included in all free trade agreements that New Delhi has concluded, or is negotiating.

Nath and Amari signed a joint statement concluding their discussions on the Delhi-Mumbai Industrial Corridor Project, which entails the development of infrastructure along a 1,483 km dedicated freight corridor between New Delhi and Mumbai. It includes the building of airports, setting up of several agro-processing parks and special economic zones, creating 4,000 MW of power generation facilities, and two ports in the states of Gujarat and Maharashtra.

The project, which has been scaled up in terms of cost, to $ 90 billion from $ 50 billion earlier, is being mainly financed by Japan which is eager to invest in India’s infrastructure projects.

A taskforce has been asked to finalise a concept paper on the project before Japanese Prime Minister Shinzo Abe’s visit to New Delhi in August.

July 4, 2007