The Free Trade Agreement (FTA) negotiations between the Association of Southeast Asian Nations (Asean) and India were finally concluded in Brunei yesterday.

The landmark agreement between Asean member states and India would result in duty-free trade in most agricultural and industrial goods. The reduction in tariffs will be done over the next 10 years.

Negotiations on the modalities for trade in goods between India and the 10-member bloc reached a conclusion yesterday morning at the 4th Meeting of the 39th Asean Senior Economic Officials meeting (Seom) at The Empire Hotel and Country Club.

"This is a very important milestone in the relations between India and Asean," said RV Warjri, High Commissioner of India to Brunei Darussalam.

The FTA is now scheduled for implementation starting January 1 next year after it is ratified by the governments of all Asean member-countries and India. On August 27 this year, Asean economic ministers will meet top Indian officials in Singapore to approve the deal, according to the Indian High Commissioner.

The key meeting comes closely following the collapse of the Doha round of trade talks last week, a failure which analysts have said would push countries to move faster on regional trade agreements.

The Indian team was led by GK Pillai, the Commerce Secretary of the Indian government, while the Asean side was represented by Philippines Trade and Industry Secretary Peter Favila.

On the sidelines of the meeting, negotiations were also concluded on the modalities on the Dispute Settlement Mechanism (DSM). The DSM model to be used in the Asean-Indian FTA was taken "by and large" from the World Trade Organisation (WTO), said Warjri, seeing that all parties involved are WTO members.

Following the conclusion of talks on modalities for trade in goods, Asean and India will also look at establishing a similar pact which will also include services like the knowledge industry, according to Warjri.

The FTA talks, which began in 2002 and were initially scheduled for conclusion by the end of 2005, had reached a stalemate last year due to disagreement over reduction of import tariffs on palm oil by India.

According to Indian news portal The Economic Times, Malaysia and Indonesia, the world's two biggest exporters of palm oil, wanted India to make steeper tariff reduction commitments in both crude palm oil and refined palm oil. In January this year, India offered tariff reductions on crude palm oil (43 per cent) and refined palm oil (51 per cent), which Asean agreed to.

When the agreement looked set to be finalised, Indonesia raised a new demand for further tariff reductions on crude palm oil and refined palm oil and also presented a big negative list of items which it wanted to be excluded to the FTA.

Citing official sources, The Economic Times reported that Indonesia realised it was single-handedly blocking the deal and therefore revised its offer.

"Even though India was negotiating with Asean from time to time, which involved dialogue with individual member-countries because every country has highly sensitive lists. That is why it took time. But finally all these things were sorted out today," said Warjri.

Meanwhile, Asean secretary-general, Surin Pitsuwan welcomed the conclusion of the agreement and said the "last-mile" talks managed to resolve several contentious issues that had been holding back the two from reaching an agreement.

"The FTA with India is Asean's fourth with a dialogue partner, following Japan, China and South Korea," said Surin adding that the FTA with India would offer vast business potential.

Trade between India and Asean reached nearly US$20 billion last year and is expected to grow to US$30 billion by 2010. Courtesy of Brunei Times