ASEAN, India agree to quicken free trade area negotiations

Economic ministers from the 10-member Association of Southeast Asian Nations (ASEAN) and India agreed Friday in Vientiane that negotiations on a free trade area (FTA) between the two sides should be sped up in the coming months, an Indian minister said.

Senior economic officials from India and ASEAN will have two more talks from now to the 11th ASEAN Summit to be held in December in Malaysia to "resolve the issues separating both sides, especially those regarding the rules of origin (ROO)," E.V.K.S Elangovan, Indian minister of commerce and industry, said after the 4th consultations between his ministry and ASEAN economic ministers.

Treasuring private sector's involvement in the ASEAN-India engagement, the ministers also appealed for closer interaction and collaboration between business communities and government officials towards the realization of the FTA.

Noting the slow process of setting up an ASEAN-India Regional Trade and Investment Area, including a free trade area, as specified in the Framework Agreement Comprehensive Economic Cooperation between ASEAN and India signed in 2003, the ministers agreed to push back the date for the FTA one year to Feb. 1, 2007, ASEAN General Secretary Ong Keng Yong said after the consultation, noting that the ROO issue seems to be the main cause.

The Indian side put forth the twin criteria of determining ROO, namely the value addition method and change in tariff heading (CTH), he noted, adding that he 40 percent domestic value addition in goods is generally applied in the world.

Rules of origin are designated to prevent third countries from taking advantage of a FTA between two other countries. If a goods does not meet the origin criteria, it is deemed as originating from a third country and cannot be traded under the FTA.

ASEAN members are reluctant to accept the CTH criteria. CTH means that a certain products entering a FTA member economy will go through sufficient value addition to become another product, which will bear a new tariff head under the International Harmonized System of Customs classification, before being exported.

Setting up the ASEAN-India FTA in goods is targeted for completion by Dec. 31, 2011 for Brunei, Indonesia, Malaysia, Singapore, Thailand and India. For the Philippines, Cambodia, Laos, Myanmar and Vietnam, the target is on Dec. 31, 2016.

ASEAN-India trade soared 48.2 percent on year to 5.5 billion US dollars in the first quarter of this year, the Indian minister said, noting that last year's respective figures were 40.8 percent and over 17.6 billion dollars.

Source: Xinhua