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FTA discussions stalled over
negative item lists
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India says the demand for only
60 items is unreasonable
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Malaysian hand seen in
excessively aggressive targets for palm oil
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Negotiations between India and ASEAN over the proposed Free Trade Agreement (FTA)
appear to be deadlocked over ASEAN’s demand that India prune down its list to
only 60 items on which it will offer no tariff cuts. Additionally, ASEAN has
also rejected New Delhi’s offer for a Tariff Rate Quota (TRQ) on palm oil, tea
and pepper. TRQ is a method that would marginally lower import for fixed
quantities of products being imported into India. Last week in Singapore, New
Delhi submitted a revised negative list of 854 items from its original list of
1,414 items.
ASEAN, presumably influenced by Malaysia, also wants India to include palm oil
in the tariff reduction list. If India were to accept this proposal, it would
have to bring down tariffs on palm oil to 0% by 2011—obviously this proposal
has been rejected by India.
The only way stalled negotiations will go forward is with a political decision
which may not be the right way to negotiate. Senior commerce ministry officials
say they will seek direction from the Prime Minister’s Office (PMO) and the
trade and economic relations committee. Per current brief for the commerce
ministry, “There is no possibility of India pruning its negative list further
since the negative list is far higher for other countries with which India has
or is in the process of finalizing bilateral agreements,” The proposed negative
list is 1,072 for Bay of Bengal Initiative for MultiSectoral Technical and
Economic Cooperation (BIMSTEC) and nearly 5,400 for Singapore.
Interestingly, ASEAN FTA with China allowed that county as much as 2000 items.
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