Seal FTA, keep knotty issues aside: Experts

PM IN SINGAPORE

Even as negotiations on the ambitious Indo-Asean foreign trade agreement (FTA) remain deadlocked, experts suggest the way forward will be to leave the sticky points aside for the time being and proceed ahead with concluding the treaty

Analysts also point out that Asean may be trying to take advantage of the past trend of India showing flexibility in its stance in order to seal the agreement with the 10-nation trading bloc.

A major roadblock to the FTA are Indonesia and Malaysia, who have been asking for a further cut in palm oil duties while Vietnam has been insisting on further concession on tea and coffee.

"It won't be possible to show any flexibilities on palm oil as it could become a big political issue, especially in states like Kerala" said a Delhi-based trade expert.

The political sensitivity on further flexibilities on farm products could be gauged from the fact that Kerala Chief Minister VS Achuthanandan had recently expressed concern about a Kerala High Court order, allowing import of palm oil through the Cochin port.

"More than 3.5 million coconut farmers in the state are furious abut the Asean FTA, which could lead to higher imports of palm oil, threatening their livelihood security," said KN Harilal, associate professor at Trivandrum-based Centre for Development Studies and member of Kerala State Planning Board.

"It looks like the political leadership will take a final view on the Asean FTA. One possible alternative is that the agreement could be operationalised, leaving aside the four contentious items of palm oil, tea, cofee and pepper," said Nagesh Kumar, director general of Research and Information System for Developing Countries (RIS).

He feels that duties on palm oil will not be a barrier for countries like Malaysia and Indonesia as demand for the commodity is going to increase, driven by an increase in use of biofuels.

According to RIS fellow Ram Upendra Das, an expert on Asean, the sticking points on the four farm products should be discussed bilaterally between the respective Asean countries and India.

"Indian exporters will loose out to their Chinese counterparts in the trillion dollar Asean economy if the FTA does not materialise, " he adds.