19/11/2007 (The Times of India), New Delhi - Malaysia continues to be a spoiler for India's economic impetus in the south-east Asian region. A dispute between Malaysia and India on tariffs on palm oil imports is one of the few things that is holding up the conclusion of a free-trade agreement between India and the Asean countries.

The two sides remain far apart on key issues of tariff cuts and it's unlikely India and the 10-nation grouping will be able to stitch up things before PM Manmohan Singh travels to Singapore later this week for the East Asia summit.

Indian officials admit that a free-trade agreement with Asean would be a big step forward in the country's engagement with the region, which has been the focus of the Look East policy. Any failure in talks will be a disappointment for the PM who is keen on the agreement, seeing it as a driver for Indian exports and Indian presence in the region.

The lack of an FTA will see China get a headway in the region, and successfully cut India out. Not only has China concluded an FTA with Asean, it is now in the process of working out a services agreement.

By 2010, China and Asean hope to work out an investment and two services pacts. Asean secretary-general Ong Keng Yong was quoted in the 'RChina Daily' as saying that while Asean was involved in FTA pacts with Japan and India, the China-Asean FTA was "easier, more positive and healthier because we started from the big picture and then proceeded to address the smaller details".

A last minute effort is on to salvage the treaty before the summit. Commerce minister Kamal Nath is expected to be in Singapore to negotiate the treaty with Asean counterparts early next week. India wants to put services in the agreement but Asean is apparently not yet ready.

India has offered to lower customs duty to 50% on crude palm oil and 60% on refined palm oil by 2018. Additionally, it has offered to cut duties on pepper and black tea by 50% by 2018. India has also agreed to put in lax rules of origin criteria to make it easier for Asean exports.

Malaysia and Indonesia want India to bring them down to 30% and 40%. Vietnam wants cuts on pepper and tea, which is being opposed by the domestic industry. On palm oil, India said since it is an assured market, Malaysia should have no worries (India is the world's second largest importer of palm oil and Malaysia the largest exporter).