India may ink preferential trade pact with Mauritius

India and Mauritius are likely to enter into a Preferential Trading Agreement before going for a Comprehensive Economic Cooperation Agreement (CECA).

Since India and the Asean have failed to agree on the rules of origin, the two sides are likely to extend the deadline for the framework agreement by another six months from September.

Senior government officials said a high-level delegation led by Commerce Secretary S N Menon recently held discussions on the CECA with Mauritius and the general view was that economic integration could get a start with a Preferential Trade Agreement.

Officials said the contentious issue of rules of origin (ROO) was present between India and the Asean.

"The Asean member countries have convened a meeting early next month to deliberate on the rules of origin. The ROO is an issue not just with India but with all other countries it wants to have an economic engagement with. They have decided to have a meeting among themselves first to sort out the issue," an official said.

The framework agreement between India and Asean had stated that for trade in goods, negotiations on the agreement for tariff reduction/elimination and other matters as set out in Article 3 of the Agreement, would commence in January 2004 and conclude by 30 June 2005, in order to establish the India-Asean FTA.

As per the agreement the tariff reductions were to start from 1st January, 2006, and tariff rates applicable to Most Favoured Nations were to be gradually eliminated.

Similarly, the negotiations on the ROO for trade in goods under Articles 3 and 7 and modality for tariff reduction and elimination under Article 7 were to be concluded by 31 July, 2004.

The interim rules of origin suggested for Asean were far more liberal than the those negotiated for Thailand and Singapore. The ROO stipulated only 40 per cent value addition with no change in the tariff heading.

Over 200 items were slated to get concessional duty benefits under the early harvest scheme which was later dropped on account of differences on the issue over the ROO.

However, the interim rules of origin for Thailand and Singapore are much more stringent.

India already has an early harvest for 82 products with Thailand to be operational from September 2004 with 40 per cent local value addition and change in tariff heading at the 4-digit level with product specific exemptions on some items. Singapore too has a similar criteria.

Asean has a membership of 10 countries, namely Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.