Proposed ASEAN-India FTA hits the wall

Proposed ASEAN-India FTA hits the wall

KUALA LUMPUR, Dec. 9 Kyodo

The proposed free trade agreement between the Association of Southeast Asian Nations and India has hit a wall after ASEAN rejected Friday India’s proposal to have more than 1,400 products excluded from the tariff reduction scheme.

Malaysian International Trade and Industry Minister Rafidah Aziz said talks face ”difficulties” due to an ”exclusion list” submitted by the Indian side.

”India has presented an exclusion list of 1,414 products, which represent 44 percent of ASEAN’s total exports to India,” she told reporters after the informal meeting between ASEAN economic ministers and India ahead of the annual ASEAN summit next week in Kuala Lumpur.

”How can you exclude 44 percent of our products already?” she asked.

The products, which Rafidah described as ”amusing,” range from toilet seats, chewing gum and dolls, to rice, textiles, vegetable oil and petroleum products.

The latter two alone accounted for 27 percent of ASEAN total exports to India in 2004.

”If vegetable oil can’t get into India, then what’s the point?”

Earlier, Indian Commerce and Industry Minister Kamal Nath expressed confidence the free trade pact could be forged by Jan. 1, 2007.

”We are heading towards concluding our agreement with ASEAN countries. An agreement that will be effective from Jan. 1, 2007,” he told reporters.

Rafidah responded, ”I am glad that Kamal has said he is fairly confident because the ball is at his feet actually…We told him, he had better get it enforced (by Jan. 1, 2007).”

”That is why Kamal Nath needs to do a lot of chopping off…Now the minister must be wiser and try to do what is right. I am very positive about this that we will (sign the FTA),” she said.

Kamal said officials from both sides would be meeting in February. He hoped by middle of next year the outstanding issues could be resolved.

Earlier, the two parties had hit a bump over the issue on the rules of origin, but it has since been ironed out.

Both sides agreed that products with at least 35 percent local content are eligible for the tariff reduction scheme.

ASEAN’s trade with India last year amounted to $17.6 billion, 1.8 percent of ASEAN’s total global trade. ASEAN’s exports amounted to $10.9 billion and imports from India were valued at $6.7 billion.

ASEAN stands to lose some $4.76 billion in export revenue if it agrees to India’s exclusion list.

ASEAN groups Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Laos, the Philippines, Singapore, Thailand and Vietnam.

Malaysia is the country coordinator and the chair of the ASEAN-India FTA.

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