India-ASEAN FTA by July 2007, PM offers open skies policy

Cebu, Jan 14: In a major breakthrough, India and the ten ASEAN countries today removed the last hurdles in the way of a Free Trade Agreement (FTA) that will now be concluded by July, 2007, and agreed on several new initiatives to step up India's economic engagement with South-East Asia.

Prime Minister Manmohan Singh told the fifth India-ASEAN Summit on this central Phillipines island that India was also willing to engage ASEAN countries in a discussion on an open skies policy, suggested by Singapore at the last summit.

Dr Singh noted that India-ASEAN trade recorded an impressive growth of 30 per cent last year to touch 21.3 billion dollars.

The Prime Minister said India was strongly committed to the early conclusion of the FTA agreement and implementation.

He noted that at the ASEAN Economic Ministers (AEM)-India Consultation Meeting here on January 11, at which India was represented by Commerce and Industry Minister Kamal Nath, progress was made on resolving outstanding issues relating to exclusion lists and tariff concessions.

"We should direct our Trade Ministers to expedite the negotiations so that the FTA can be finalised, as agreed, by July 2007," he said.

Today's summit endorsed the breakthrough agreement reached at the AEM-India meeting on the "negative list" in the proposed FTA.

Under it, ASEAN agreed to India's proposal for maintaining a Negative List of 490 items, with trade coverage not exceeding five per cent, by both the sides.

Negotiators would now meet and resolve the remaining outstanding issues by July, 2007.

Briefing reporters after the summit, Mr Kamal Nath said items such as crude palm oil, refined palm oil, pepper and tea would remain on the "highly sensitive list". India has offered to bring down tariffs on these items to 50 per cent over the next 15 years.

The base year for calculating tariffs would now be 2007, when the agreement will be signed, instead of 2005 as had been originally agreed.

He said negotiations on the normal track would commence immediately after the conclusion of the FTA agreement and be completed by 2011.

Dr Singh told the summit that greater connectivity was also central to the idea of regional economic integration.

"The initiative taken in 2003 to liberalise air services has led to a significant increase in flight connections between India and ASEAN, with concomitant benefits in trade and people-to-people contact. I recall, at our last summit, the Prime Minister of Singapore had proposed that we now look at an open skies policy.

We have examined this proposal and I am happy to announce that we would be willing to engage ASEAN authorities in a discussion on such a policy," he said.

The Prime Minister called for steps for the early operationalisation of the proposed India-ASEAN Science and Technology Development Fund. He said the fund should support the development of strategic alliances between Indian and ASEAN researchers and lead to further collaborative research and development in the region.

Dr Singh assured the summit of India's continued support for the Initative for ASEAN Integration (IAI).

He noted that, in this context, the India-Cambodia and India-Vietnam Entrepreneurship Development Centres had become operational last year and that the Laos Centre was working since November, 2004.

"We also have a wide-ranging programme of cooperation with Myanmar, which is our gateway to ASEAN. Such cooperation is, indeed, heartening as it demonstrates the benefits that the India-ASEAN relationship can bring to common people," he remarked.

The Prime Minister said he was gratified with the positive response to the first training course for ASEAN diplomats organised by India recently and proposed that such cooperation be institutionalised on an annual basis.

Dr Singh noted that the year 2007 marked the 40th anniversary of the founding of ASEAN and the 60th anniversary of India's attainment of independence.

"Together the anniversary numbers total 100, a perfect square. I would like to offer our young friends from ASEAN countries an invitation to visit India. We will host 10 students from each of the 10-member countries of ASEAN on a trip of the sights and sounds of modern and ancient India. Centres of IT excellence in India will figure prominently in the itinerary," he said.

Underlining that connectivity and flows of tourism should remain a priority area, he said India would be launching special tourism packages in ASEAN countries this year. "We would also be happy to facilitate similar campaigns in India from ASEAN countries," he said.

The Prime Minister told the summit that the launch of India's "Look East Policy" in 1992 coincided with the beginning of the economic reforms process in India.

"Today, India is very different from the India of 1991. It is now a vibrant market-place. Our entrepreneurs are aggressively investing overseas. India has also emerged as a productive and profitable investment destination," he said.

Dr Singh said India today had a 700 billion dollar economy that is growing at 7 - 8% every year. In the first half of the current year, economic growth reached 9.1%, he said.

"We have actively pursued external liberalization by cutting down customs duty rates. The current peak rate, at about 12.5%, is quite close to ASEAN levels. We have a policy objective of aligning our duty rates with ASEAN levels," he said.

The Prime Minister noted that ASEAN countries had also seen many changes over the past few years.

"The most significant has been the process of ASEAN economic integration, and a similar process for deepening economic integration between ASEAN and its dialogue partners. The convening of the East Asia Summit last year was a historic development. We acknowledge ASEAN's valuable contribution in being the driving force for this positive development and for inviting India to be there at the start," he said.

He said India was seeking to deepen its economic integration by entering into Free Trade or Comprehensive Economic Partnership Agreements, both with ASEAN as a whole and with individual countries of the region.

"Such agreements are already under different stages of discussion or implementation with Singapore, Thailand, Malaysia and Indonesia.

This web of mutually beneficial partnerships can, we believe, be brought together in a Pan Asian FTA that could light up the future of this region," he said.

"It is important for us to engage with each other, with not just greater intensity, but also more creativity," he said.

Stressing that the proposed FTA would prove to be a win-win arrangement for both sides, Mr Kamal Nath said it was important for them to respect each other's sensitivities in such matters.

The minister said all the member-countries were extremely appreciative of the manner in which the India-ASEAN relationship had evolved and grown over the past few years.

In reply to a question, Mr Kamal Nath said negotiations for an FTA agreement with China will be held after a Joint Study Group submits its report by October this year. He said a similar study with Malaysia had been completed and negotiations on an FTA agreement would commence soon. A Joint Study Group would soon be set up with Indonesia, he said. India already had FTA agreements with Thailand and Singapore.

"So, while we are talking to ASEAN collectively, we are also moving forward with bilateral arrangements," he explained.

The Prime Minister arrived on this central Philliines island last night to attend the India-ASEAN Summit today and the 2nd East Asia Summit (EAS) tomorrow as part of India's bid to elevate its engagement with South East Asia and East Asia to qualitatively new levels and give a fresh impetus to its "Look East Policy" launched in 1992.

The two summits were originally scheduled for mid-December but Philippines postponed the 12th ASEAN Summit and all other related events because of concerns over an approaching typhoon.

ASEAN brings together Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

Apart from the 10 ASEAN members and India, the EAS will be attended by Japan, China, South Korea, Australia and New Zealand.

India sees its "Look East Policy" not merely as an external economic policy but also as a strategic shift in its vision of the world and its place in the evolving global economy.

It is also India's way of reaching out to its "civilisational neighbours" in South East Asia and East Asia.

Apart from the Entrepreneurship Development Centres in Cambodia, Laos, Myanmar and Vietnam (CLMV), India has also set up English Language Training Centres in these four countries.

A proposal to provide satellite connectivity between India and the CLMV countries for tele-medicine and tele-education applications is currently under active consideration.

Other areas of cooperation include trade and investment, science and technology, including information technology and space sciences, tourism, transportation and infrastructure.

The first India-ASEAN Summit was held in Phnom Penh, Cambodia, in November 2002, followed by the second in Bali, Indonesia, in October, 2003, the third in Vientiane, Laos, in November, 2004, and the fourth at Kuala Lumpur, Malaysia, in December, 2005.

Dr Singh will attend a gala dinner being hosted tonight by President Arroyo of the Phillipines for the heads of state and government attending the EAS.

After the EAS, Dr Singh will leave here tomorrow afternoon for Kolkata, where he will spend the night before visiting the violence-hit areas of Asom on Tuesday.

UNI