India and 10-member Association of Southeast Asian Nations (ASEAN) have finally reached to a deadlock over proposed tariff cuts in sensitive farm products like palm oil by sorting out long-standing differences in Brunei. The meeting concludes on Thursday.
But, the matter of service and investment are still on the nascent stage and the talks over these two issues is likely to be decided on next schedule meeting of Trade Ministers of corresponding nations on August 28, 2008.
According to sources, the meet over these two topics may conclude before ending this year as the trade member nations are expecting to get implement Free Trade Agreement (FTA) from either January 01 or June 01, 2009, depending on the finalisation of the deal after everyone’s approval.
The negotiations committee of India and ASEAN that convened the meeting this week to eradicate the differences on tariff cut on several commodities have finally decided to cut tariffs on four-fifth of all traded commodities step by step within 10-year tenure.
The next meeting of trade ministers has been schedule on August 28, 2008 to fix a date for beginning negotiations on services and investment and to formally approve the FTA.
After approving the FTA, the legal framework will be framed to draft the deal that will be signed by heads of states during the next ASEAN summit in December in Bangkok.
India and ASEAN have reached on endpoint of negotiations over palm oil duties as India after long negotiations has agreed to cut duties in crude palm oil (CPO) and refined palm oil (RPO) by 5.5% and 6% respectively and offered it to fix at 37.5% and 45% as against its previous offer of 43% on CPO and 51% on RPO. Indonesia has accepted it.
Moreover, India has also decided to cut import duties on tea, coffee and rubber which were pending for more than one year. Now, India has announced to chop import duty in phased manner by 2018. The new proposed import duties on tea and coffee would be 45% as against current 100%, on rubber to 50% from existing bound rate of 70%.
Here, the term bound rate means a ceiling on which a country cannot raise tariff under any circumstances. The bound rate is the base rate of tariff negotiation of all trade agreements held in WTO.
The ASEAN that comprises 10 nations - Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Thailand, Singapore and Vietnam- began trade talk with India in 2001 after India open the door for the foreigners to enter India’s broad market following the liberalisation trade policy.
Earlier, India since the beginning of talks wanted to strict Rules Of Origin (ROO) - a vital part of any trade agreement as it determines how much value addition to an imported product should be done by the partner country to make it qualify as a product originating - to prevent the third country goods flow in to India through ASEAN nations at reduced duties while ASEAN wanted to make it more relaxed.
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