Background of India-ASEAN Free Trade Agreement

What is Background of India-ASEAN Free Trade Agreement?

1. The Indo-Asean Free trade pact will be signed this December at the India-Asean summit at Bangkok, which is expected to be attended by Prime Minister Manmohan Singh.
2. This agreement will require India to lower and abolish duties on 85 percent of its imports from the region between 2010 and 2019.
3. Initial bilateral framework of this agreement was signed in Bali on 8 October 2003, and the pact was supposed to be finalised by 30 June 2005. Negotiations on services would start in 2005 and end in 2007.
4. However there were a lot of impediments over a period of five years, India and the Association of South East Asian Nations (ASEAN) have finally negotiated a bilateral free trade agreement — with plenty of difficulty.
5. The negotiations came to a halt in June 2006 when India released its ’negative list’ of items to be excluded from tariff reductions — with 900 products, both industrial and agricultural, figuring on the list. India had initially given the negative list of 1410 items which was reduced in 2006 to 900 items.
6. India’s agriculture ministry, in particular, was arguing hard to exclude commodities like rubber, pepper, tea, coffee and palm oil from the deal. Rules of origin have been the other thorny issue.
7. In August 2006, Delhi issued a revised list, the number of the negative list items was cut down to 560 items.
8. By early 2007, in the midst of the new bio fuels boom, palm oil became a central blockage point as Indonesia and Malaysia, both top palm oil exporters, struggled to get India to lower its tariffs.
9. On 28 August 2008, a deal was finally concluded. The agreement is supposed to be signed in 2009.