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India, ASEAN conclude free trade deal |
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India on August 28 concluded negotiations on a free trade agreement (FTA) with the ASEAN bloc, which will ensure lowering duties and a free flow of trade in goods. Prime Minister Manmohan Singh will sign the agreement at the East Asia Summit in Bangkok in December, which is much more strategic in scope, particularly as South Block sees it. The FTA is the centrepiece of India’s diplomatic footprint in the region which New Delhi intends to be a heady cocktail of trade, political contacts, social and cultural linkages, connectivity and military ties.
The main countries that will be included in the new trade bloc are India, Thailand, Indonesia, Malaysia, Myanmar, Vietnam, and the Philippines. India and the ASEAN countries had a trade volume of $38 billion in 2007 and expect it to touch to $50 billion by 2010. The pact is delayed because of differences over products that India wanted to exclude from tariff cuts. India had submitted a list of 1,414 products, while the ASEAN countries were ready to accept only around 400 products for exclusion. Under the pact, India and the ASEAN will bring down duties to zero on 71 per cent of products by December 31, 2012 and another 9 per cent by 2015. Duties on another 8 per cent to 10 per cent of the products will also be brought down to 5 per cent. A limited number of products will be excluded from tariff concessions based on the domestic sensitiveness of the respective countries. The trade in goods has provisions for a special track for tariff reduction for five products, which are key to exports of some of the ASEAN countries. The products are crude and refined palm oil, coffee, pepper and tea. Commerce Minister Kamal Nath said India has already reduced tariffs on most of the goods unilaterally.
Nath said the agreement, which took six years to be concluded, is a key milestone for the development and security of the region. India and the ASEAN will also negotiate trade in services and investment as a single undertaking as soon as possible, said a joint statement issued by the leaders after consultations. Both the parties would like to conclude the negotiations by 2009. Malaysia will co-chair the working group on investment in India. Singapore will chair the working group on services. India has been a relative late-comer in the ASEAN region, with China, Japan and Korea forging ahead rapidly.
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