The Telegraph
Since 1st March, 1999
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India follows in China footsteps
- Curtain goes up on free trade talks with Southeast Asia

Phnom Penh, Nov. 4: India is looking forward to negotiations with the Asean to create a free trade arrangement with the Southeast Asian regional trading bloc comprising 10 nations in the near future.

Foreign minister Yashwant Sinha told a group of journalists attending the first Asean-India summit-level talks beginning tomorrow that the event marked an exciting new phase in ties with the regional trading bloc that has a combined gross domestic product of $750 billion.

“It’s a very important beginning; we are now in the same league as Japan, China and South Korea. We did not have this facility (of summit-level talks) earlier,” Sinha said, adding that India was the fourth nation that had graduated to this level.

India became a partial dialogue partner of Asean 10 years ago and became a full dialogue partner in 1995. It’s a sign of the incremental growth in the relations between Asean and India and an acknowledgement of the business opportunities that both can profit from.

China, however, has a huge headstart over India. It signed a deal with Asean today to give birth to the biggest free trade zone on earth.

“I would say that this is one of the most significant agreements to be signed this year anywhere in the world,” an Asean official said.

It commits the two sides to a free trade pact that kicks in in 10 years and paves the way for the elimination of tariff and non-tariff barriers on trade in goods. ( )

The creation of an Asean-China free trade area will give companies in Asean the opportunity to target 1.7 billion consumers in a market economy that has a combined gross domestic product of $1.5 to 2 trillion.

The more established six Asean members — Singapore, Malaysia, Brunei, Thailand, Indonesia and the Philippines — have pledged to reduce tariffs on goods traded within the region to between zero and 5 per cent. Most of these reductions have already taken place.

“We are latecomers in the field,” Sinha said while acknowledging that both South Korea and China had made advances in forging close trade ties with Asean.

India, which has a concertina of tariffs that scale up to as high as 150 per cent on some products, will have to prune its levies to Asean levels — a commitment that the government has often stressed in the past with more resolve than conviction — if it wants to forge a free trade arrangement with Asean.

Sinha refused to commit to a date saying the talks were at a very nascent stage. A task force has already been set up to create a broad framework for the free trade arrangement with Asean.

“We hope that as a result of these talks a clear roadmap will emerge to create a free trade arrangement,” said Sinha who, as finance minister earlier, had been instrumental in rationalising and lowering tariffs.

However, the gripe around the world has been over the high tariff in products like cars where it ranges around 150 per cent and liquor where it scale up to around 400 per cent (not counting state levies which, if combined, would raise overall duty levels close to 700 per cent).

In contrast, duty levels on cars in China are a little over 37 per cent and the government there is committed to bringing it down to around 10 per cent. This is only one example of how far India really needs to go on the tariff front before it can create a truly workable free trade arrangement with Asean.

Sinha said the talks with Asean would also focus on security issues, especially in the light of the growing menace of global terrorism, the shadow of which fell across the region recently with the blasts in Bali last month that left over a 150 dead.

India is hoping to forge a co-operative alliance with Asean in the global war against terrorism. “This will focus on intelligence sharing and a commonality of action to fight the scourge that has afflicted the world,” Sinha said.

Earlier in the day, Prime Minister Atal Bihari Vajpayee said terrorists were emboldened to strike soft targets in the country. The Ansal Plaza incident in Delhi yesterday where police gunned down two militants before they could strike bore testimony to the state of alertness and greater collaboration between the country’s intelligence and policing agencies, he said.

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