07/10/2007 (Business Standard), New Delhi - Differences on duty reduction on items in highly sensitive list mean a spillover to next year. 
 
The much-awaited free trade agreement (FTA) between India and the 10-member Asean bloc has hit a roadblock, due to disagreements over reduction of duties on palm oil. 
 
It is now certain that negotiations to conclude the agreement will now spill over to the next year, delaying the pact that would have led to a cheaper import of products between the countries. 
 
Negotiators from both countries have been extensively discussing market access to products from sectors like spices, plantation crops , vegetable oil, rice, fish, textiles, chemicals and plastics, electronics, machinery, auto components as well as footwear in which India has domestic interests to protect because of the large number of people employed in them. 
 
Last week, negotiators from both sides tried to iron out differences on the offers, so that a formal announcement of the FTA could be made during the visit of Prime Minister Manmohan Singh to the 13th Asean Summit in Singapore from November 17-20. 
 
“This is unlikely now, as differences on duty reduction of the highly sensitive list are yet to be sorted out. The negotiations will now spill over to the next year,” said a government official. 
 
India had signed a framework agreement on comprehensive economic cooperation with the Asean bloc in October 2003, according to which, negotiations were to conclude by June 2006. With differences remaining unresolved, July 2007 was taken as another deadline, which too did not work out. 
 
Sources said that in the highly sensitive list, which includes items like palm oil, refined palm oil, black pepper, tea and coffee, the Asean negotiators were insisting on additional tariff cuts in palm oil, over and above that was being proposed by India. 
 
They added that Asean wanted duties on crude palm oil to be brought down to 40 per cent from 45 per cent, and 30 per cent on refined palm from 52.5 per cent. 
 
India is of the view that it is the second biggest importer of palm oil from the region and hence there should not be any concern from their side. Moreover, concessions will compromise the oilseed producers in the country. 
 
India has also objected to the highly sensitive list proposed by the Asean, in which ‘more than 100 products have been put’. 
 
According to the Indian offer, duties will be eliminated on 4,180 items. Thus, the country has committed tariff elimination in 80 per cent of its total tariff lines, which includes 5,254 items. However, the Asean demand has been for 83 per cent of the total Indian tariff lines. 
 
Moreover, India has also pruned its sensitive list to 550 items from the earlier figure of 709, in which import duties would be reduced over a period of time. Most of these products belong to sectors like textiles, machinery and auto as well as chemicals and plastic. 
 
Further, the negative list, in which there would be no reduction of duties, has been pruned to 490 products. 
 
Asean accounts for 10 per cent of India’s export and import baskets. In 2006-07, exports to the region increased by 20.67 per cent to $12.56 billion, while imports grew by 66.15 per cent to $18.08 billion.