India has inked a pact with the ASEAN (Brunei , Darussalam, Cambodia, Indonesia , Lao PDR , Malaysia , Myanmar ,Singapore, Thailand , Viet Nam , Philippines ) Countries on 13th August 2009, with the intention to boost bi-lateral trade between India and ASEAN Countries by giving Most Favoured Nation status subject to certain conditions, stipulations, and binding clauses. However, the present Freee Trade Agreement has its origin in the Framework Agreement on Comprehensive Economic Cooperation between the Republic of India and the Association of Southeast Asian Nations (the Framework Agreement) signed in Bali, Indonesia on 8 October 2003.
India has signed 4 separate Agreements with the ASEAN Countries. They are:- 1] Protocol to Amend the Framework Agreement on Comprehensive Economic Cooperation between the Republic of India and the Association of Southeast Asian Nations ; 2] Agreement on Dispute Settlement Mechanism under the Framework Agreement on Comprehensive Economic Cooperation between the Republic of India and the Association of Southeast Asian Nations; 3] Comprehensive Trade in Goods Agreement under the Framework Agreement on Comprehensive Economic Cooperation between the Republic of India and the Association of Southeast Asian Nations ;
4] Understanding on Article 4 of the Trade in Goods Agreement under the Framework Agreement on Comprehensive Economic Cooperation between the Republic of India and the Association of Southeast Asian Nations.
In the Treaty One, there is an explict Artcile- (2) which talks about reduction/elimination of Applied MFN Tariff rates for normal Track products set out in Paragraph 5(a) (i) to (iii) of Artcile 3 of the Frame Work Agreement gives the date with the year of elimination /conclusion under Track I and Track II. The Agreement shows that the new Agreement is concluded to reiterate the framework Agreement and to reflect the current position in relation to the Early harvest porgramme (EHP).
In the Second agreement, the Agreement on Dispute Settlement Mechanism , its coverage, application, arbitration, consultation, conciliation, mediation, suspension of concession of benefits under Para 4 and 5 of Article 15 can be done only after the Final order of the Arbitration panel set up under the provisions of this Agreement.
Agreement on trade on goods is a 93 page document. Article (4) refers to Tariff Reduction and Elimination. It is stated that tariff Reduction and elimination Schedule is set out in Annexure- I. Annexure I contains the Schedule of tariff Commitments. In the Explanatory notes, under 1 (a) Normal track is defined as MFN tariff rates for tariff lines placed in the Normal track will be reduced and finally eliminated on a time schedule basis. The same procedure will be followed for items placed in the Normal Track (2) as well. Under (b), there is a Sensitive Track, wherein it is stated that applied MFN Tariff rates above 5% for tariff lines in the sensitive track will be reduced by 5% in accordance with the Schedules. Under (c) which has categorized Special products, it is stated that Crude and refined palm oil (CPO and RPO) which has a customs duty of 76% and 86% will be reduced to 37.5% and 45%, and Coffee which has a present duty of 95% will be reduced to 45%, black Tea from the present 95% to 45%, Pepper from 68% to 50% by 31-12-2019. This Agreement also talks about Highly sensitive Lists, wherein the tariff lines are split into 3 categories namely, Category-1 Reduction of applied MFN Tariff to 50%, Category 2 reduction of MFN Tariff to 50%, and category 3 wherein the reduction of applied MFN Tariff to 25%. These reductions would reach the completed phase for Indonesia, Malaysia and Thailand (31 Dec 2019), Philippines (Dec 2022), Cambodia and Vietnam (31 Dec 2024). The compendium of clauses which pertain to Safeguard Measures, and the compliance to Artcile XIX of GATT 1994, Agreement on Safeguards in Annexe 1 A to the WTO Agreement, Artcile 5 of the Agreement in Agriculture in Annex 1 A to the WTO Agreement on Agriculture, AIFTA safeguard methodologies, etc. The method of calculation of AIFTA content is detailed in Appendix- A. There is also under (e) an Exclusion List which says that the list shall be subject to an annual tariff review with a view to improving market access. There is an Appendix- C which says that it is a single list of Textiles and Textiles Products based on Harmonized Code prevalent in 2002) wherein Harmonized Code chapters 30,39,42,50,51,52,53,54,55,56,57,58,59,60,61,62,63,63,65,66, 87, 88, 70, 94,95, are described. All types of textiles, both hand made, cotton based, handloom, silk, floor coverings including Coir handmade products, home decorative products, bed sheets, bed covers, pillow covers, floor carpets, woolen fabrics, glass fibres, Coir Rubberized mattresses, pillows, cushions, quilts, etc find a place.
AIFTA Certificate of Origin is defined in Artcile 7, and back to back certificate of Origin appear in Artcile 11 under Operational Certificate protocol. All those bodies who can issue certifications and are presently included in Appendix 4 A of the Hand Book of Procedures, Vol I, are the competent agencies to issue the AIFTA CoOs.
As far as Kerala is concerned, its Rubber, marine products, cashew, coconut, spices, Coir, pepper, Coffee, Tea exports will be affected as ASEAN Countries are having similar crops. These countries have higher productivity and have gone for modernization while the units in the State will have to grapple with old obsolete machinery, high cost of production, shortage of technical experts, poor marketing strategies, etc. Though the Agreement speaks about Sensitive Tracks, Special products, highly sensitive lists, etc, the items which are included in the Lists have not been published as an Appendix or as Annexure. There is also fear amongst the artisans and farmers of Kerala that the lists purported to have been prepared by India may not have been approved, otherwise, the Agreements would contain the Sensitive Lists. The State Government has gone on record and said that there is no negative list, even though the Commerce & Industry Minister has committed in writing about the existence of such a list and send a Copy. But all said and done, the Central Government must present a transparent picture, and should come out with the truth regarding whether the List has been approved by all the ASEAN Countries. Why can’t they publish it in the Commerce Ministry web site to allay the fears of Kerala?
India has signed 4 separate Agreements with the ASEAN Countries. They are:- 1] Protocol to Amend the Framework Agreement on Comprehensive Economic Cooperation between the Republic of India and the Association of Southeast Asian Nations ; 2] Agreement on Dispute Settlement Mechanism under the Framework Agreement on Comprehensive Economic Cooperation between the Republic of India and the Association of Southeast Asian Nations; 3] Comprehensive Trade in Goods Agreement under the Framework Agreement on Comprehensive Economic Cooperation between the Republic of India and the Association of Southeast Asian Nations ;
4] Understanding on Article 4 of the Trade in Goods Agreement under the Framework Agreement on Comprehensive Economic Cooperation between the Republic of India and the Association of Southeast Asian Nations.
In the Treaty One, there is an explict Artcile- (2) which talks about reduction/elimination of Applied MFN Tariff rates for normal Track products set out in Paragraph 5(a) (i) to (iii) of Artcile 3 of the Frame Work Agreement gives the date with the year of elimination /conclusion under Track I and Track II. The Agreement shows that the new Agreement is concluded to reiterate the framework Agreement and to reflect the current position in relation to the Early harvest porgramme (EHP).
In the Second agreement, the Agreement on Dispute Settlement Mechanism , its coverage, application, arbitration, consultation, conciliation, mediation, suspension of concession of benefits under Para 4 and 5 of Article 15 can be done only after the Final order of the Arbitration panel set up under the provisions of this Agreement.
Agreement on trade on goods is a 93 page document. Article (4) refers to Tariff Reduction and Elimination. It is stated that tariff Reduction and elimination Schedule is set out in Annexure- I. Annexure I contains the Schedule of tariff Commitments. In the Explanatory notes, under 1 (a) Normal track is defined as MFN tariff rates for tariff lines placed in the Normal track will be reduced and finally eliminated on a time schedule basis. The same procedure will be followed for items placed in the Normal Track (2) as well. Under (b), there is a Sensitive Track, wherein it is stated that applied MFN Tariff rates above 5% for tariff lines in the sensitive track will be reduced by 5% in accordance with the Schedules. Under (c) which has categorized Special products, it is stated that Crude and refined palm oil (CPO and RPO) which has a customs duty of 76% and 86% will be reduced to 37.5% and 45%, and Coffee which has a present duty of 95% will be reduced to 45%, black Tea from the present 95% to 45%, Pepper from 68% to 50% by 31-12-2019. This Agreement also talks about Highly sensitive Lists, wherein the tariff lines are split into 3 categories namely, Category-1 Reduction of applied MFN Tariff to 50%, Category 2 reduction of MFN Tariff to 50%, and category 3 wherein the reduction of applied MFN Tariff to 25%. These reductions would reach the completed phase for Indonesia, Malaysia and Thailand (31 Dec 2019), Philippines (Dec 2022), Cambodia and Vietnam (31 Dec 2024). The compendium of clauses which pertain to Safeguard Measures, and the compliance to Artcile XIX of GATT 1994, Agreement on Safeguards in Annexe 1 A to the WTO Agreement, Artcile 5 of the Agreement in Agriculture in Annex 1 A to the WTO Agreement on Agriculture, AIFTA safeguard methodologies, etc. The method of calculation of AIFTA content is detailed in Appendix- A. There is also under (e) an Exclusion List which says that the list shall be subject to an annual tariff review with a view to improving market access. There is an Appendix- C which says that it is a single list of Textiles and Textiles Products based on Harmonized Code prevalent in 2002) wherein Harmonized Code chapters 30,39,42,50,51,52,53,54,55,56,57,58,59,60,61,62,63,63,65,66, 87, 88, 70, 94,95, are described. All types of textiles, both hand made, cotton based, handloom, silk, floor coverings including Coir handmade products, home decorative products, bed sheets, bed covers, pillow covers, floor carpets, woolen fabrics, glass fibres, Coir Rubberized mattresses, pillows, cushions, quilts, etc find a place.
AIFTA Certificate of Origin is defined in Artcile 7, and back to back certificate of Origin appear in Artcile 11 under Operational Certificate protocol. All those bodies who can issue certifications and are presently included in Appendix 4 A of the Hand Book of Procedures, Vol I, are the competent agencies to issue the AIFTA CoOs.
As far as Kerala is concerned, its Rubber, marine products, cashew, coconut, spices, Coir, pepper, Coffee, Tea exports will be affected as ASEAN Countries are having similar crops. These countries have higher productivity and have gone for modernization while the units in the State will have to grapple with old obsolete machinery, high cost of production, shortage of technical experts, poor marketing strategies, etc. Though the Agreement speaks about Sensitive Tracks, Special products, highly sensitive lists, etc, the items which are included in the Lists have not been published as an Appendix or as Annexure. There is also fear amongst the artisans and farmers of Kerala that the lists purported to have been prepared by India may not have been approved, otherwise, the Agreements would contain the Sensitive Lists. The State Government has gone on record and said that there is no negative list, even though the Commerce & Industry Minister has committed in writing about the existence of such a list and send a Copy. But all said and done, the Central Government must present a transparent picture, and should come out with the truth regarding whether the List has been approved by all the ASEAN Countries. Why can’t they publish it in the Commerce Ministry web site to allay the fears of Kerala?
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