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 8 Aug 2008

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Asean-India FTA talks wrapped up

Difficult negotiations over an Asean-India free trade deal have been concluded and the last obstacles overcome, AFP quoted Association of Southeast Asian Nations (Asean) secretary general Surin Pitsuwan as saying Thursday.

"They have been concluded but not signed. They have just finished the negotiations," Surin told AFP from Bangkok, without elaborating.

The agreement covering billions of dollars in trade but not services between the 10 Asean states and India was supposed to have been concluded last year.

But talks became bogged down by differences over products which India wanted excluded from tariff cuts. New Delhi had submitted a list of 1,414 products, while Asean's target number was 400.

At their annual summit in Singapore last November, Asean officials said the grouping would not resume negotiations with India until it came up with a better offer.

Tricky issues including demands for lower duties on palm oil by Indonesia, which have not yet been fully sorted out, are expected to have been dealt with at the meeting held Thursday in Brunei, reported an Indian business daily.

The FTA is now scheduled to be implemented from January 1, 2009 after it is ratified by the governments of all Asean member countries and India. The FTA negotiations, launched in 2003, were initially scheduled to be concluded by 2005-end, The Economic Times reported on its online edition Thursday.

The FTA talks had reached a stalemate last year due to disagreement over reduction of import tariffs on palm oil by India. Malaysia and Indonesia, the world’s two biggest exporters of palm oil, wanted India to make steeper tariff reduction commitments in both crude palm oil (CPO) and refined palm oil (RPO). In January this year, India offered to reduce tariffs on CPO to 43 percent and RPO to 51 percent, which the Asean agreed to.

When the agreement looked ready to be sealed, Indonesia raised a new demand that tariffs on CPO should be reduced to 20 percent and RPO to 30 percent, which created a fresh hindrance. Indonesia also presented a big negative list of items which it wanted to be excluded from the FTA.

Indonesia realised it was single-handedly blocking the deal and, therefore, revised its offer. It has now not only improved its offers on items in negative and sensitive lists but has proposed end rates of 35 percent for CPO and 42.5 percent for RPO by 2018, the daily quoted official sources as saying.

It said India might agree to reduce duties on palm oil some more for Indonesia but not to the extent demanded. Malaysia’s demand that all Asean members should be allowed to export crude petroleum to India at 0 percent like Brunei (which is being given a special concession) is also unlikely to be met.

New Delhi has already matched Malaysia’s offer for tariff concession, and it is not bound to provide additional tariff concessions to the country in the area of crude, sources said.

Officials are optimistic that areas of disagreement are not serious enough to block the deal. “We are very close to reaching an agreement on the FTA. Let us hope that it is done this week,” the official said.

India adopted a free-market economy in the early 1990s and is keen to expand trade ties with Asean, but it also wants to protect sensitive sectors such as agriculture and textiles, which provide livelihoods for millions.

Asean aims to create a single market of more than half a billion people by 2015 to help battle competition from China and India.

The bloc is also seeking alliances with the fast-rising regional giants. Asean has signed a landmark deal with China to create the world's biggest free trade zone by 2010.




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