ASEAN willing to go ahead with FTA

P. S. Suryanarayana, The Hindu

“Procedural issues” hamper signing of India-ASEAN pact

SINGAPORE: The Association of South East Asian Nations (ASEAN) has indicated its willingness, “in principle,” to sign a free trade agreement (FTA) with India by resolving “a last-minute procedural matter” through “consultations.” 

This was done before India on Friday announced that the trade pact might not be signed at Hua Hin in Thailand on February 27 as planned before the “procedural” issue became intractable. 

The ASEAN’s top trade negotiator told The Hindu over telephone, before India’s latest statement, that “the spirit [on both sides] is to have the pact signed.” The ASEAN official said: “We didn’t anticipate this new issue [as a snag].” The ASEAN-India summit, at which the pact was to have been signed, got postponed from last December, because of a political crisis in the host country; and this was a factor behind the new “procedural issue.” 

Sequencing

Another factor, according to the ASEAN, was its own modality of “sequencing” the tariff reductions, something that was already applied to the 10-nation bloc’s earlier FTAs with its other trading partners. 

In that context, India expressed its disinclination to extend two packages of tariff cuts to the ASEAN in the same fiscal year, one in June this year and the other in January next year. 

The ASEAN negotiator said: “We appreciate … that they [the Indians] cannot take two cuts [in the same fiscal year] … because of the delay [in the pact being signed]. The issue has nothing to do with the [political] will [on both sides]. The problem has to do with the process. Each FTA is different. Each engagement is different. It is not necessarily a bad thing. It is part of the learning process [for the ASEAN].” 

Window of opportunity

Diplomatic sources said a “window of opportunity” would still exist, especially if the two sides could resolve this “procedural matter” before the ASEAN-India summit scheduled for later this year.