ASEAN, India agree to cut tariffs sooner

Adianto P. Simamora, The Jakarta Post, Jakarta

The Association of Southeast Asian Nations (ASEAN) and India have agreed to speed up an import tariff reduction process for certain business sectors even before a planned free trade area (FTA) between the two is implemented, a top official at the Ministry of Industry and Trade said.

The agreement for the "early harvest package" was reached during a top officials' meeting in India last week.

Eliver Radjagoekgoek, director of regional cooperation at the ministry said that each ASEAN member country had to submit proposal of products to be included in the early harvest package by next month.

"We (Indonesia) are now selecting the products, we may include agriculture products such as crude palm oil (CPO) and coffee," Eliver said on Tuesday.

He said that India, the world's second most populous country might lower tariffs on its technology products.

However, it is not clear yet when the new tariffs would go into effect.

"But this is a sign of goodwill in ASEAN-India trade talks," he said.

In 2002, economic ministers from ASEAN and India agreed to set up a regional FTA within 10 years.

Total ASEAN-India trade value was US$9.88 billion in 2001, up 30 percent from $7.6 billion in 2000.

Eliver said that the implementation of a free market with India would create opportunities for Indonesia to boost exports to the country.

Trade value between Indonesia and India reached $1.4 billion in 2000, higher than the previous year of $1 billion. Indonesia exports included CPO and natural gas to India.

The 10 ASEAN members are Indonesia, Singapore, Malaysia. Thailand, Brunei, the Philippine, Laos, Cambodia, Myanmar and Vietnam.

The six founding ASEAN members signed the ASEAN Free Trade Area (AFTA) pact in 1993. AFTA came into full effect for those six on Jan. 2003 in which the import tariffs on a majority of products was now between zero percent to five percent.

The grouping has also signed a similar free trade deal with China, in which the early harvest package, mainly in agricultural products will be implemented in Jan. 2004, and the FTA implementation would start in 2005.

With Japan, ASEAN signed a declaration on a comprehensive economic partnership which contains elements for an FTA in 10 years' time.

ASEAN is now looking to ink free trade deals with the European Union in the near future.

Each of ASEAN members is also seeking opportunities to make free trade deals with the United States.