NEGATIVE LIST FOR INDO-ASEAN FTA TO TAKE CARE OF DOMESTIC CONCERNS
Date : 13 Mar 2006
Location : New Delhi
The government in consultation with stakeholders throughout the country is finalising a negative list for the ASEAN-India Free Trade Agreement (FTA) in order to protect its sensitive products and sectors especially in agriculture while negotiating the FTA. Items in the negative list - also known as the Sensitive List - will be exempt from tariff reductions. Addressing the wrap-up session of domestic stakeholder consultation for finalisation of the negative list titled “India-ASEAN FTA Negotiations: Wrap up Meeting” organised by UNCTAD here this morning, Shri S.N. Menon, Commerce Secretary, stressed that while finalising the list, the sensitivity of domestic industry would have to be considered and said he was confident that longer time-frames would give comfort to the Indian industry.
The Framework Agreement on Comprehensive Economic Cooperation between India and ASEAN, signed on 8th October, 2003, inter-alia, envisages a Free Trade Area (FTA) in goods, and conclusion of these negotiations by June, 2006. Shri Menon indicated that negotiations to cover services were also likely to be initiated shortly. Those who participated in the one-day consultation were: Shri P.K. Dash, Joint Secretary, Ministry of Commerce & Industry; Ms. Sushma Berlia, President, PHD Chamber of Commerce & Industry; Dr. Veena Jha, Project Coordinator, UNCTAD; Shri R. Ratna, Director, Ministry of Commerce; Dr. Shahid Ahmed; and Shri Abhijit Das & Dr. Rashmi Banga of UNCTAD, along with a large number of stakeholders.
The Indo-ASEAN FTA in a sense takes forward India’s “Look East” policy which was initiated in early 1990s, Shri Menon said, adding that today ASEAN was one of the fastest growing markets for our exports. “It is often said that ASEAN offers a market of just about 600 million people as compared to the market of 1.2 billion being offered by India. There is another way of looking at this situation. ASEAN though has a smaller market in terms of demography, but it is a market of over US $ 355 billion of extra ASEAN imports. India’s share in ASEAN’s global imports is less than even 1% of their total imports. The possibilities are unlimited”, Shri Menon said.
The Ministry of Commerce had requested UNCTAD under the Project “Strategies and Preparedness for Trade and Globalisation in India” to conduct a study to identify the items which are sensitive for India in the Indo-ASEAN FTA. In this connection, UNCTAD conducted a series of consultations with stakeholders throughout India in Ludhiana, Ahmedabad, Hyderabad, Cochin, Mumbai, Pune and Kolkata during January-February 2006. Today’s meeting is a concluding link in the series of consultations, Dr. Jha said, prior to finalisation of India’s list of sensitive products.
The sectors chosen for consultations are spices, plantation crops, vegetable oils, rice, fish, textiles, chemicals & plastics, electronics, machinery, auto components & footwear.
“It is admitted that our domestic industry faces some handicaps as compared to the ASEAN countries, but considering these handicaps the offer list for ASEAN has been divided into four categories viz. Normal Track 1, where the tariffs would be eliminated by 2011, Normal Track 2, where the tariffs would be brought down to 5% by 2011 and eliminated by 2013, Sensitive Track 1, where the tariffs would be brought down to 5% by 2013 and eliminated by 2018. The fourth category is the Sensitive Track 2, where there would be no reduction or elimination of tariffs”, Commerce Secretary explained in his address.