ASEAN-India FTA set to kick off in January

ASEAN-India FTA set to kick off in January

Zakki P. Hakim The Jakarta Post, Jakarta

Members of the Association of Southeast Asian Nations (ASEAN)
agreed on Sunday to start implementing a planned free trade area
(FTA) with economic powerhouse India in January next year.

Under the plan, tariffs on 105 products will be gradually cut
under an early harvest program (EHP) with the prospect of zero
tariffs by 2007. The products include unprocessed agriculture
products, chemical and manufactured products.

Leaders of the regional grouping are expected to approve the
plan at a summit in November this year in Vientiane, Laos.

The decision was taken during the last day of a three-day
ASEAN Economic Ministers (AEM) meeting here, where trade and
economic ministers from the 10 member countries of the regional
grouping met with their counterparts from the region's key
trading partners to push FTA plans and boost economic
cooperation.

It was agreed during a leaders summit in Bali last year that
the more developed countries of ASEAN would set up a fully
fledged FTA with India by 2011, with the new members of the
grouping following by 2016.

ASEAN founding nations are Brunei, Indonesia, Malaysia, the
Philippines, Singapore and Thailand, while Cambodia, Myanmar,
Laos and Vietnam joined later.

Trade between the ASEAN countries and India reached US$8.07
billion last year, a slight decline from $8.42 billion the
previous year.

Indian Minister of Commerce and Industry Kamal Nath told a
press conference that the implementation of the EHP should have
started in November, but due to some "unsorted things," the
schedule had to be delayed.

"But now we are on track to complete these (steps)," Nath
said.

But the two sides have yet to resolve disagreement on what are
termed the rules of origin affecting the 105 products. It is
hoped that an agreement can be reached before the leaders' summit
takes place.

The ministers on both sides have also agreed to prioritize
seven areas of economic cooperation for immediate implementation,
including collaboration in information-technology (IT),
outsourcing, and investment in information and communication
technology (ICT) parks.

Elsewhere, ASEAN also agreed to start FTA talks with Australia
and New Zealand next year, with the hope of concluding them in
2007.

The decision was taken during a meeting with Australian
Minister of Trade Mark Vaile and New Zealand Minister for Trade
Negotiations Jim Sutton.

ASEAN exports to Australia and New Zealand stood at $18.85
billion last year, up 77 percent from $10.67 billion the year
before.

"The economic integration would double approximately the size
of the effective joint market," Sutton said.

"The integration is going to drive political stability and
security (in the region)," he added.

The deals followed similar agreements on Saturday to push for
FTAs with Japan, South Korea and China.

Also on Sunday, the ASEAN ministers met with the European
Union Trade Commissioner Pascal Lamy, who hailed the regional
grouping's plan to integrate its economies and become like an EU-
style single market and production base.

Lamy told a press conference that the economic integration via
liberalization drive would provide a major boost in attracting
global foreign direct investment.

"... We believe that this is a strong incentive for the
development of investment and trade in the region," Lamy said.