Indo-Asean FTA talks may slip on palm oil

Negotiations on the proposed Free Trade Agreement (FTA) between India and the 10-member Asean are stuck over tariff cuts on palm oil. In addition, Asean countries like the Philippines, Vietnam and Indonesia have not submitted the timeline for tariff cuts on items on the "highly sensitive list" of products.

A resolution to these issues could come during Prime Minister Manmohan Singh's visit to Singapore for the 13th Asean summit in November, when observers expect an announcement on the FTA.

India and Asean had earlier set a July deadline for concluding the negotiations. Sources close to the development said October (when discussions to conclude the treaty would be held) would be crucial. Sources added the Asean negotiators were pushing for more concessions on palm oil duties. India imports over 50 per cent of the total palm oil that it consumes from Asean nations like Malaysia and Indonesia.

"Indian negotiators have told Asean that further concessions on palm oil duties are not possible. India is the second biggest importer of palm oil from that region and hence there should not be any concern from their side. Further concessions will compromise the oilseed producers of India," said a source.

Also, the Philippines, Vietnam and Indonesia have not submitted the timeline for tariff cuts on the "highly sensitive list" of and products. "Indian negotiators have not been able to fully evaluate the Asean countries' offers on this crucial front. These countries have not as yet told us when they will start paring their Customs tariffs," said the source.

Tariffs cuts on items in the highly sensitive list "" which consists of crude palm oil, refined palm oil, black pepper, tea, and coffee "" will be cut from 50 per cent to 60 per cent by 2018. Asean is also demanding tariff cuts on crude oil, but India is willing to take this step only for countries like Brunei.

India and Thailand are expected to operationalise their already signed FTA soon after the Asean FTA is conckuded. At present, both countries have a partially operational FTA (known as the early harvest scheme), under which more than 80 items are being traded freely.

India and Singapore are also scheduled to undertake extensive discussions tomorrow to increase the list of items under the Comprehensive Economic Partnership Agreement. Sources said India had agreed in principal to add 500 more items in the free trade list. The negative list of items on which there is no tariff cut has around 5,000 items.