The Hindu : Front Page : Manmohan to work towards concluding FTA

Online edition of India's National Newspaper
Sunday, Jan 14, 2007
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Manmohan to work towards concluding FTA

K. Venugopal

ASEAN to be told of domestic sensitivities of farm prices

TOWARDS BETTER TIES: Prime Minister Manmohan Singh being greeted by Finance Minister of the Philippines Margarito B. Teves, on his arrival at Mactan Cebu International Airport for the fifth India-ASEAN summit on Saturday. — PHOTO: PTI/VIJAY VERMA

Cebu (The Philippines): Prime Minister Manmohan Singh flew into the Philippine island resort of Cebu on Saturday for the fifth India-ASEAN summit knowing full well that a Free Trade Agreement is still far from settled.

"I believe that the India-ASEAN FTA is an important initiative to promote this greater economic synergy, and I shall use this opportunity to explore steps that both sides can take to hasten the conclusion of this important agreement," he said in a statement made on his departure from New Delhi.

Points of contention

The free trade deal was originally set to start on January 1, 2006, but a year on there is still no agreement on the terms. The points of contention are India's import duties on farm goods especially palm oil — the duty on crude palm oil is 80 per cent — which are perceived to discourage exports from Malaysia and Indonesia.

No manoeuvring space

ASEAN is calling upon India to relent on these duties before it will agree to go ahead with the free trade deal. But India's negotiators hemmed in by farm interests in the country have had little room for manoeuvre. Any reduction in the duties would cause the price of not just palm oil to fall, but also that of other oils such as mustard and groundnut. That would dent the income of growers in India.

Dr. Singh will have another chance at the summit on Sunday afternoon and his meeting with Malaysian Prime Minister Abdullah Bin Ahmad Badawi, ahead of that to convince ASEAN about the domestic sensitivities of farm prices.

On Monday, Dr. Singh has a wider canvas to work on at the second East Asian Summit, which comprises Japan, China, South Korea, Australia, New Zealand in addition to the 10 members of the ASEAN. This is a grouping whose combined gross domestic product is almost as large as that of the European Union and growing at a much faster rate. It intends to see how it can work together towards greater energy security and a stronger regional financial system.

The combined official foreign exchange reserves of this grouping now exceed $2 trillion, larger than those of the U.S. and the E.U. put together.

Dr. Singh's schedule on Sunday includes a meeting with Chinese Prime Minister Wen Jiabao.

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