21/11/06 (The Times Of India)  - NEW DELHI: Asean has demanded more duty concessions from India to sign a comprehensive economic cooperation agreement (CECA) — a free trade agreement covering goods, services and investment.

For starters, the 10-member trading bloc has demanded that the negative list of products, where duties would not be cut, should exclude 387 items from the 560 proposed by India in August. The products include textiles, farm goods, chemicals and petrochemicals, sources said.

India has offered to allow duty free import of 4,021 items of which tariffs would be removed for 3,073 items by 2011 and for the rest by 2015. Over the last few months, India has also pruned its negative list from 1,414 at the start of the negotiations to 560 now. The 850-odd items taken away from this list have been put on the sensitive list, where duties are proposed to cut to 7.5%. Now, Asean wants zero duty export for another 350 items to India.

But what makes India's task most difficult is the proposal on four sensitive products — black tea, pepper and refined and crude palm oil — that has resulted in criticism from the local lobby and even prompted Congress president Sonia Gandhi to dash off a letter to PM Manmohan Singh.

India has offered to keep the import duty on the four commodities unchanged during the first five years of the trade pact and then reduce tariffs gradually. For black tea, the customs duty is proposed to be halved to 50% by 2022, while pepper will see tariff fall from 70% to 50% during the period. Similarly, crude palm oil import duty is proposed to be reduced from 80% to 50% and refined palm oil will see a cut from 90% to 60%.

During last round of negotiations, Asean asked India to start with the tariff reductions immediately and also wants that the duties be brought below the 50-60% level proposed by India. It also sought that the tariff reduction programme be completed by 2018 as against 2022 proposed by India.

Officials said India was willing to consider some proposals regarding pruning of negative list for which it will soon approach the Trade & Economic Relations Committee headed by Singh, but changes in the special product proposals appeared difficult given the sensitivities involved. "We will try to finalise our position in 10-15 days so that the matter can be dealt with when the ministers meet early next month. But Asean also needs to give us a formal response to the proposals we submitted in August," an Indian official said.