Last-minute political opposition in India and several Asean countries regarding specific provisions of the bilateral free-trade agreement has cast doubt on whether the deal can be signed by the end of the year.
Trade ministers from India and the 10 Asean countries will meet later this week in an attempt to see if the FTA could be suitably altered and readied before the Asean summit in Phuket in November, said a government official.
The FTA, once implemented, will lead to the elimination of tariffs on more than 4,000 products, including electronic goods, chemicals, certain capital goods and some categories of textiles. Prime Minister Manmohan Singh is to sign the agreement with other heads of state during the Asean Summit.
However, the state government of Kerala is concerned that bringing down duties for tea, coffee, palm oil and rubber could hit the local farmers and industry hard.
With the Indo-ASEAN Free Trade Agreement (FTA) now slated to become operative in January 2010, agricultural experts, fishermen's representatives, trade union leaders and Kerala's Marxist Chief Minister VS Achuthanandan have been at pains to convince the pro-reform central government of Prime Minister Manmohan Singh that the deal should be postponed or even scuttled.
"The center has bypassed its constitutional duty to take Kerala and other states into its confidence before deciding to go ahead with this deal," Achuthanandan told Inter Press Service (IPS) soon after a meeting with Singh in the national capital last week to discuss the issue. "We are yet to see a copy of the proposed pact which, if signed, will undoubtedly affect the fisheries and plantation sectors."
Indonesia and Malaysia, which had pushed the hardest for paring of duties by India on palm oil, continue to express their displeasure over the levels agreed to by the two sides. The two countries could create trouble in getting the treaty ratified by their respective governments, the official added.
This, however, may not turn out to be a big problem as the India-Asean FTA can be implemented even if a couple of countries do not get it ratified immediately. Once signed, the India-Asean FTA is scheduled to be implemented from January 1, 2010.
The Economic Times, Last-minute glitch may hold up free-trade pact with Asean, 11 August 2009, http://economictimes.indiatimes.com/News/Economy/Foreign-Trade/Last-minu...
DNA India, Asean FTA gives coffee growers sleepless nights, 10 August 2009, http://www.dnaindia.com/money/report_asean-fta-gives-coffee-growers-slee...
Asia Times Online, Kerala fights clock in ASEAN free-trade deal, 11 August 2009, http://www.atimes.com/atimes/South_Asia/KH11Df01.html