Go-ahead for Indo-ASEAN free trade agreement

Green light for Indo-ASEAN free trade agreement

Published: Friday 30 June 2006

the prime minister's Trade and Economic Relations Committee (terc) has , recently, given the green light for the implementation of the free trade agreement (fta) with the Association of South East Asian Nations (asean) from January 1, 2007. The Indo- asean free trade agreement is the biggest trade pact India has entered into so far.

But terc' s decision is receiving flak from various farmers' organisations, which fear the agreement could result in cheaper import of agricultural commodities and pose a serious threat to Indian farmers and the domestic agricultural industry. "Our plantation and edible oil economy is already depressed under cheaper imports from the asean countries. With zero-duty import, the market will see a further set back," says Kishan Bir Chaudhary, executive chairman, the Farmers Forum, India's largest farmer's organisation.

Sensing trouble, terc had asked for the tariff rate quota (trq) regime to restrict the zero-duty import to a certain quantity. "But the exact nature of the restrictions and duty imposition is yet to be clear; it waits for discussion among the Union ministry of finance (mof), the Union ministry of agriculture and the Union ministry of commerce & industry (moci)," says a senior moci official. Even the trq regime might not be of much help and the losses could be huge, "for cheaper imports would cut the domestic market share and the country's international market share for the same commodities", says Benny Kuruvilla, a researcher with Mumbai-based think tank Global Focus on South.

Outweighing issues like notional revenue loss, impact on domestic industry and farmers, terc claims that fta will accelerate trading activity since there will be an increased competition. Chaudhary refutes this argument saying: "The increased competition may benefit consumers but farmers will pay for it with their lives.

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