23/5/06 ( rediff.com)  - The Asean has unilaterally called off the next round of negotiations scheduled for May 29 in Singapore for finalising a free-trade agreement with India.

The reason is India's refusal to prune the negative list of 991 items, a demand made by the regional bloc.

New Delhi has opposed the unilateral move and shot off a communication. It has pointed out that the negative list is not the real issue as it is willing to prune it to some extent. India wants Asean to agree to a tariff rate quota for 16 agricultural items like crude palm oil, tea, coffee and pepper.

TRQ is a concession under which import duty would be marginally lowered for a fixed quantity of products imported into India.

The commerce ministry had, at the last meeting of the trade and economic relations committee, obtained a mandate to reduce its negative list with the Asean to 850 from 991, and on these items it would offer no tariff cuts.

However, ministry officials say a reduced negative list will not address Asean demands as the 16 items will not be offered by India for any tariff liberalisation programme.

Four Asean member countries -- Malaysia, Indonesia, Vietnam and Mayanmar -- are pressing for import duty cuts on their exports of palm oil, tea, coffee, pepper and rubber on grounds that these exports account for a substantial share of their trade with India.

"Since India is keen to retain these agricultural items in its negative list, the coverage of trade for these countries barring these items would be less than 40 per cent in some cases," a ministry official added.

The officials of the commerce and agricultural ministries are scheduled to meet this week to finalise the quantum of TRQs that India would be willing to offer Asean member countries.

One of the options would be to offer a TRQ on 10 per cent of the average imports of the item over the last three years.