19/4/07 (The Economic Times)  - NEW DELHI: As India and Asean are about to enter the 16th and probably the last round of negotiations on the proposed free trade agreement (FTA), an integral element of the envisaged comprehensive economic co-operation agreement between them, Asean is again acting tough.

This threatens to push back the July 2007 deadline, set by heads of governments at Philippine town of Cebu in the run-up to the Asean meet, for finalisation of the agreement. Commerce ministry officials here said Asean’s latest position that India should make available at least two of its five “special products” namely crude and refined palm oil, for reasonable tariff reductions, could throw a spanner in the works.

As for India, having already ceded a lot of ground during the earlier rounds, which included a major whittling down of its negative list, items on which no tariff reduction will be offered, the latest stance of Asean looks regressive and intractable.

The question that Asean negotiators raise during exchange of views with their India counterparts is about the alleged shallowness of India’s insistence on keeping five products of export interest to Asean countries like Malaysia in the special products list. As regards items on this list, India needs to reduce tariffs to 50% by 2022, a very flexible schedule compared to other tariff lines being covered in the free trade agreement.

The Asean side has pointed out that since the customs duty on palm oil is already 50%, a commitment to keep it not above 50% in 2022 has little relevance. India, however, argues that that might not be the case, as the recent cuts in palm oil import duty, aimed at addressing shortages, shouldn’t be considered the norm. The duties could be hiked any time.

New Delhi’s patience is running out, as it reckons that since the October 2003 agreement between the two sides to have comprehensive economic cooperation, it has made a lot of compromise. During the talks since then, India has pruned its negative list in phases to 490.

On the other hand, the consolidates negative list of Asean countries (after avoiding tariff lines getting repeated in the separate lists of Asean countries) has gone up from about 600 initially to 1,000 plus. Asean, it may be noted, keeps a smaller negative list for its FTA with China.

“We have been more liberal (in conceding demands) with Asean than with other countries we are negotiating FTAs or comprehensive economic cooperation agreements with, like Korea, Japan and the Gulf Cooperation Council,” said a commerce department official.