India is set to sign a free trade agreement (FTA) with the 10-nation Association of South East Asian Nations (Asean) at the next Indo-Asean summit in Thailand in December 2009. The FTA is said to have the potential to multiply bilateral trade between India and Asean. India has several compulsions under its ?Look East? policy to be in good terms with its southeastern neighbours which are close to China. A Sino-AseanFTA is nearly in place.
The Indo-Asean FTA would reduce tariffs to zero in over 4,000 goods, out of the 5,000 that are traded, in phases over the net six to ten years.
Though the 2007-08 bilateral trade, at $34.38 billion, constituted only 9.60% of India?s global trade, it touched all the commodities, from fish to rubber, on which farmers of Kerala survived. With increasing input cost and labour shortage, only the cultivation of cash crops, because of better returns, has remained viable. Hence, there was a spontaneous outburst against the FTA from sociopolitical leaders from the state. Asean also has the same produces to market as Kerala has?tea, coffee, pepper, rubber, edible oil and marine products.
Kerala?s apprehensions, given vent to in Parliament and during Cabinet meetings, have been allayed by highlighting the protective steps in the FTA like partial reduction in import tariffs on highly sensitive farm goods, the sensitive list of goods with partial duty cuts (606 products) and a negative list with no duty cuts (489 goods, including 302 farm items).
These assurances and protective measures would have to be taken note of by the people and political leaders of Kerala. They have to wake up to the global context from the present home market insularity and recognise the wider national and international economic imperatives.
Better farm practices have to be adopted in a competitive global market environment. With the Doha Round of the WTO negotiations nearing completion, and the world markets getting integrated, India as an emerging economic superpower would not be able to remain isolated for parochial interests.
joseph.vackayil@expressindia.com