Friday, August 29, 2008
India and ASEAN signs Trade in Goods Agreement
ASEAN –Southeast Asian trading bloc and India at last are prepared for signing a free trade agreement in goods like European Union style open market. The pact was supposed to have been reached last year but could not be, because there was some difference of opinion on products that India wanted to exclude from tariff cuts. New Delhi bad submitted a list of 1414 products, while the ASEAN`s target number was 400. India`s commerce minister Mr Kamal Nath described as “key regional milestone” this Trade in Goods (TIG) agreement with the 10 member ASEAN. The deal is likely to be signed in the next December in Bangkok during Indo-Asean summit. The minister observed “The countries of East Asia are important drivers of growth……with large consumption to drive global economies”, he referred to the combined market of 1.5 billion people that is waiting to be tapped. India and ASEAN currently enjoy a total trade of $38 billion and expect it to touch $50 billion by 2010. Under the pact India and ASEAN will eliminate import duties on 71 per cent of products by 31st December 2012 and another nine per cent by 2015. Duties on eight to 10 per cent of the products that have been kept in the sensitive list will also be brought down to five per cent. India had already reduced tariffs unilaterally. India`s peak tariff rates now average 9.7 per cent compared to 20-25 per cent five years ago. A limited number of products will be excluded from tariff concessions based o the domestic sensitivities of the respective countries. The TIG has provisions for a special track for tariff reduction for five products, which are key to exports of some ASEAN members. These are crude, refined palm oil, coffee, pepper and tea. Both sides will also negotiate trade in services and investment as a single undertaking as soon as possible. Malaysia will co-chair the working group on investment with India while the working group on services will be co-chaired by Singapore. It appears the prospects of growth in trade and investment is immense.