Centre explores ways out of Asean stalemate

New Delhi, July 26 | Updated: Jul 27 2006, 05:30am hrs
Taken aback by the statement of the Malaysian trade minister regarding suspension of free trade talks with Asean, the commerce ministry has decided to consult the trade and economic relations committee headed by the Prime Minister to find out ways to take forward the discussions.

A spokeswoman for the Malaysian trade minister had said on Tuesday that the discussions were suspended due to Indias unwillingness to liberalise its markets.

Sources said the commerce ministry had received the letter regarding the suspension of the talks from the Malaysian trade minister a couple of weeks back and added that currently hectic internal consultations were on.

Commerce secretary SN Menon told FE the Malaysian ministers statement could not be taken as official Asean stance. We have not got any official word from Asean, suggesting a withdrawal of the bloc from the discussions, Menon said.

FE had earlier reported that India may cede some more ground to make the proposed Comprehensive Economic Co-operation Agreement (CECA) with the Asean a reality. Currently, the proposed agreement with the Asean is referred to as a Free Trade Agreement (FTA) for trade in goods. But as per the October,2003, framework agreement, the pact with Asean was to be broader in canvass, including investment, services as also other areas of economic cooperation.

Under pressure from Asean, India has already agreed to prune the negative list to 854 of the total 5,224 tariff lines, from an original list of 1,414, and offered that 75% of tariff lines would be bound to 0 tariff by specified end dates, latest by 2018. Asean, not keeping any negative list for itself, wanted Indias negative list to be reduced drastically to 60 and 85% of the product lines to be bound to zero tariff by 2013, and the remaining by 2015-16.

The Malaysian trade ministers spokeswoman said goods on the exclusion list of 854 items account for some 30% of Southeast Asias exports to India.

The main roadblock in clinching the agreement for trade in goods, at present, is concerning the negative list, which includes several sensitive items for India like textiles, auto parts, chemicals and agri products.Asean had earlier turned down Indias proposal to set the tariff rate quota for agri products like palmoil, tea and pepper.