The ambitious Free Trade Agreement (FTA) on merchandise goods between India and the Association of Southeast Asian Nations (ASEAN) has been finalized and the deal is ready for signing.
The agreement aims to implement comprehensive duty cuts according to a timetable that would bring down tariffs on some 4,000 trade items to 5 percent or below over the next three to nine years. More than three-fourths of the products will attract a maximum duty of 4 percent, while selective 5 percent tariffs will be reserved for products deemed ‘sensitive’ by the countries exporting them.
India’s list of sensitive items includes manufacturing goods like textiles, garments, and automobiles. The agreement also allows India to shield 479 items -- mostly agricultural goods -- from tariff cuts.
While most ASEAN countries have agreed to bring down their tariffs by 2016 or 2019, a longer implementation period is being prepared for Cambodia, Laos, Myanmar, and Vietnam, which are less developed. ASEAN and India account for 9 percent and 11 percent of each other’s exports, respectively, and agreement on the trade deal comes at a time when world trade is expected to shrink by 9 percent in 2009.
Although all of the details of the FTA have now been finalized, the deal is not likely to be signed until the summit of ASEAN nations in October later this year.