BALI, 8 October 2003 — Prime Minister Atal Behari Vajpayee held out possible fast-track cuts in tariffs to Southeast Asian nations yesterday, a day before the South Asian giant signs a framework for a free trade area with the region. India will sign the agreement with the 10-member Association of Southeast Asian Nations (ASEAN) at the group’s annual summit, being held on the Indonesian resort island of Bali, as part of an initiative to counter the power and trade of a resurgent China.
“India is today a country on the move,” Vajpayee told a meeting of regional business leaders. “It is this India that seeks to partner ASEAN in this era of globalization.”
Trade between India and ASEAN had grown 25 percent from less than $10 billion a year ago, he said. The aim of the agreement would be to push trade to $30 billion by 2007 and create a free trade area within 10 years.
“We are working on eliminating trade and investment barriers to facilitate business,” he said.
“At the same time India is conscious of the concerns of the new ASEAN members. We are offering unilateral tariff concessions on items of export interest to the CLMV (Cambodia, Laos, Myanmar, Vietnam) countries.” ASEAN comprises Brunei, Laos, Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Vietnam, Singapore and Thailand.
India was also seeking an “early harvest” scheme, Vajpayee said.
Such a scheme would involve asking ASEAN countries unilaterally to cut tariffs early on certain agricultural items.
In an economic framework China has signed with ASEAN, regional nations got early harvest tariff concessions from Beijing.
India has hunkered down behind some of the highest tariff barriers in the world, making trade liberalization a politically treacherous undertaking, and to win domestic backing for such a free trade agreement is effectively asking ASEAN for a sweetener.
India has been criticized for helping bring about the collapse of trade talks in Cancun last month, and critics say it sets higher tariffs on developing country imports than Western ones.
“Asian countries should work toward strengthening their mutual synergies so that they are strategically placed to derive maximum benefits from the emerging opportunities,” Vajpayee said.
“The India-ASEAN partnership should energize this process to move us closer to our shared goal of making this truly the Asian century.”
Thailand and India to Slash Tariffs Under New Free-Trade Agreement
Thailand and India will slash tariffs to zero on 83 products under a free-trade agreement to be signed during Prime Minister Vajpayee’s visit this week, officials in Bangkok said yesterday.
Vajpayee, who arrives in the kingdom late today, will hold talks with his Thai counterpart Thaksin Shinawatra, address the nation’s Parliament and ink the trade agreement tomorrow.
Under an “early harvest” program, within the next three years tariffs will be cut on 83 products reportedly worth about 7.7 percent of total two-way trade valued at $1.18 billion.
“The early harvest package covers 83 products including fresh fruits, vegetables, electrical appliances, chemicals and others,” a Commerce Ministry official told AFP. “The tariffs will be cut down to zero within three years.”
Under the agreement, free trade for all other goods is set for 2010.
Officials from both countries have said that the free-trade agreement (FTA) will substantially boost bilateral trade to two billion dollars annually.
Vajpayee said yesterday that regional trade deals are a stepping stone toward liberalization after the collapse of the World Trade Organization (WTO) talks in Cancun.
“In spite of the stalemate at the Cancun Ministerial Conference, a rule-based and fair multilateral trading system should remain our goal,” he told businesspeople at a conference on the sidelines of the Bali meeting.
“But while we search for this ideal, regional trading arrangements offer immediate advantages, particularly for geographically contiguous regions.” For Thailand, the FTA with India will establish it as a strategic partner to balance the kingdom’s political and trade ties with China.
Vajpayee’s program during the four-day visit includes an audience Friday with Thailand’s revered monarch King Bhumibol Adulyadej at his palace in the seaside town of Hua Hin south of Bangkok.
The Indian leader will depart for the northern city of Chiang Mai on Saturday noon where Thaksin will host a dinner before he leaves for New Delhi on Sunday.
