Singapore:India and the 10-member Association of Southeast Asian Nations (ASEAN) Thursday concluded their talks for a far-reaching pact that will open up trade at reduced tariffs in a collective market comprising 1.7 billion people.

The two-sides also hoped that the free trade agreement, scheduled to be formally signed at the ASEAN-India Summit in Bangkok in December, will eventually will pave the way for a free trade area in the region by 2016, officials said.

"It is an important milestone for our region," India's Commerce Minister Kamal Nath told a press conference here after concluding the far-reaching pact with Singapore's Industry Minister Lim Hng Kiang.

"It took six years for India to understand the sensitivities of ASEAN, and for the ASEAN to understand the sensitivities of India," said Kamal Nath, explaining why the process took so long.

"The ministers agreed to target implementation of tariff reduction commitments starting 1 January 2009," said a joint statement issued at the conclusion of the meeting, adding that they also hoped to conclude a comprehensive economic cooperation agreement by 2009.

A framework pact with ASEAN, which comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, was signed in 2003.

The agreement will give ASEAN companies an enhanced market access to India as well as reduced tariffs in some key exports like palm oil, crude, tea and pepper.

This apart, they will also enjoy a cumulative rules of origin where goods produced in one ASEAN country, then finished in another and subsequently exported to India would enjoy the same access to and concessions in the Indian market.

Otherwise, such trade pacts require that there must be a minimum value addition to merchandise goods within the exporting country in order to benefit from the tariff concessions.

"This will lead to greater integration between ASEAN and its dialogue partner," said Indonesian Trade Minister Marie Pangestu, who was present at the joint interaction with the media.

Trade between India and ASEAN reached $30 billion and the two sides have set a target of $50 billion by 2010.

Between 2005 and 2007, ASEAN's trade engagement with India grew at 31 percent annually, which was the fastest for the regional grouping among all its major trading partners.

"India is ready. The onus is on ASEAN to gather its team and start negotiations on services and investment," said Lin. The two sides said they also hoped to conclude a pact on investment and services by next year.

The Indian minister said the country's trade with ASEAN members was 9.6 percent of its total global trade. For ASEAN, India accounted for just 2 percent of its bilateral merchandise engagement.

"So the potential for enhanced economic engagement between ASEAN and India is profound.”

India and the ASEAN members have a collective gross domestic product (GDP) of $2.38 trillion in 2007.

 

Source : IANS