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Last differences between India and the Association of South East Asian Nations (Asean) on the ambitious Free Trade Agreement (FTA) on merchandise goods have been mitigated and two are now ready to sign up the bilateral trade pact.
Government officials said that FTA pact with ASEAN as well as with South Korea involving free trading in products, services and investments can be scheduled for the month of October this year and the pact can be inked on the sidelines of the summit of Asean nations.
Early this year, Asean demanded duty cuts twice a year if the treaty was to be signed in 2009. Originally, this FTA was scheduled to be signed in December 2008, with duty cuts being carried out in predetermined slabs placed at 12 months starting January 2009.
As the treaty could not be signed then, Asean members had wanted the first phase of duty cuts to be implemented as soon as the deal was signed in fiscal 2009 and the second round to be implemented in January 2010. However, India declined to undertake duty cuts twice in a period of one year.
According to an official source, “These differences have been sorted out now. India will undertake duty cuts only once in a period of 12 months.”
The new arrangement on Asean FTA is likely to lead to the first round of tariff cuts being implemented a year later than the original schedule. After that, it has been planned to announce tariff cuts in several slabs in the month of January. As per sources, The India-South Korea Comprehensive Economic Partnership Agreement (CEPA) is also ready for signing.
Official said,“Representatives from India and South Korea will attend the forthcoming Asean summit in Thailand and hence, both the deals could be signed there. Such high profile summits are favoured for announcing or inking deals.”
Both the FTAs; the one with ASEAN and the other with South Korea will need approval from the Union Cabinet before their signing.
The proposed India-Asean FTA has been delayed number of times due to differences over issues like that of restricted list of goods, duty cut in farm products like palm oil and norms related to value addition.
In comparison, negotiations on the South Korean CEPA have been smoother, apart from some issues related to enhanced market access in services-related sector like healthcare.
Both the free trade deals are likely to be signed at the time when world trade is expected to contract by 9 per cent in 2009.
Under the regime of present UPA Government, the trade deals will be the first ones to be signed, which in its earlier term had initiated about 15 negotiations on similar pacts with other countries and economic blocs like the European Union.
According to Biswajit Dhar, director general, Research and Information System for Developing Countries,“The FTA with Asean will lead to closer economic integration, taking the level of cooperation between both the sides several notches higher. Moreover, the CEPA with South Korea will get India locked into the growth dynamic seen in the region.”
Asean, which accounts for nearly 11 per cent of India’s exports and 9 per cent of imports, is seen to have strategic importance for the country. Business Standard
May 28, 2009
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