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March 24, 2008

Indonesia key to wrapping up the deal

India and the 10-nation Association of Southeast Asian Nations (Asean) may soon be signing a free trade agreement (FTA), if not before the deadline at the end of March, reported Indian business daily Economic Times.

Asean is expected to make an improved offer early in April, which can help the sides wrap up their negotiations. The Asean countries, especially Indonesia, however, have to come up with some more concessions to seal the deal, the paper said.

“We want Indonesia to match India’s offer of bringing 80 percent of the total trade products on the zero duty list. We also want all Asean members to improve their offers on products listed as sensitive commodities,” an Indian official was quoted as telling the paper.

While all other Asean members have committed to eliminate duties on 80 percent of tariff lines, Indonesia is the only country holding out, he added.

Another issue that India is uncomfortable about is the market access offered on products termed as sensitive by Asean countries.

India’s contention is that while it has accommodated the interest of the Asean by agreeing to substantial duty cuts on palm oil (both crude & refined), pepper, tea and coffee, items of primary interest to some Asean members, the Asean countries have not reciprocated to the same extent in case of their sensitive commodities of interest to India.

Asean is expected to come up with the improved offers by early April. It will be ratified by ministers only when both sides are satisfied with the agreement. Once the agreement is in place, the duty cuts will be implemented over the next decade.

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