MARKET DEVELOPMENT
India, Asean seek to wrap up FTA talks by July-end
India, Asean seek to wrap up FTA talks by July-end
19/7/07 (The Financial Express) - NEW DELHI, With tariff cut on edible oil being one of the main unresolved issues, India and Asean are entering into two crucial meetings, including one on Friday, hoping to wrap up their talks on the proposed Free Trade Agreement in goods by this month-end. Talks on inking a pact on services and investments will follow the FTA.
“The senior economic officials’ meeting on Friday in Vietnam and that of the Trade Negotiation panel in Cambodia from July 23-26 will be crucial. There are several issues to be finalised,” an official told FE.
The main issue on the agenda is an agreement on reduction of duties on edible oil, officials said. They said the officials taking part in these two meetings would report to their respective trade ministers, who in turn will be meeting this August. The report of the trade ministers will then be submitted to the respective heads of state, whose meeting is scheduled for this November.
India has offered to begin cutting tariffs by 2-3% on edible oil annually soon after the FTA comes into force. This is a major departure from its earlier stance of reducing it only from 2012. Going by the latest offer, tariffs on refined palm oil would be cut from 90% to 60% and those on crude palm oil would be cut from 80% to 50% and significantly, these cuts will have a deadline of 2018, instead of the earlier 2022.
Initially, major exporting countries of palm oil into India, like Malaysia and Indonesia, had objected to India’s insistence of placing palm oil in the negative list, thereby not agreeing to any tariff cuts. Besides edible oil, duties on items of interest to Vietnam would also be reduced during the same period. For instance, duty on pepper is likely to be cut from 70% to 50%, while tariffs on coffee and tea will come down from 100% to 50%
Earlier, under pressure from Asean, India has reduced the negative list from 1440 to 430-450. India has also agreed to prune its sensitive list (goods to be subjected to gradual duty cuts) from 709 to 550. Though 16 agricultural products will be retained in the negative list, a total of around 150 items in sectors like textiles, chemicals, auto, plastics and machinery have been taken off from the sensitive list and their tariffs will be brought down to zero by 2018.
“The senior economic officials’ meeting on Friday in Vietnam and that of the Trade Negotiation panel in Cambodia from July 23-26 will be crucial. There are several issues to be finalised,” an official told FE.
The main issue on the agenda is an agreement on reduction of duties on edible oil, officials said. They said the officials taking part in these two meetings would report to their respective trade ministers, who in turn will be meeting this August. The report of the trade ministers will then be submitted to the respective heads of state, whose meeting is scheduled for this November.
India has offered to begin cutting tariffs by 2-3% on edible oil annually soon after the FTA comes into force. This is a major departure from its earlier stance of reducing it only from 2012. Going by the latest offer, tariffs on refined palm oil would be cut from 90% to 60% and those on crude palm oil would be cut from 80% to 50% and significantly, these cuts will have a deadline of 2018, instead of the earlier 2022.
Initially, major exporting countries of palm oil into India, like Malaysia and Indonesia, had objected to India’s insistence of placing palm oil in the negative list, thereby not agreeing to any tariff cuts. Besides edible oil, duties on items of interest to Vietnam would also be reduced during the same period. For instance, duty on pepper is likely to be cut from 70% to 50%, while tariffs on coffee and tea will come down from 100% to 50%
Earlier, under pressure from Asean, India has reduced the negative list from 1440 to 430-450. India has also agreed to prune its sensitive list (goods to be subjected to gradual duty cuts) from 709 to 550. Though 16 agricultural products will be retained in the negative list, a total of around 150 items in sectors like textiles, chemicals, auto, plastics and machinery have been taken off from the sensitive list and their tariffs will be brought down to zero by 2018.