Asean - India Free Trade Agreement (Fta)

Association of South East Asian Nations (ASEAN) and India Free Trade Agreement (FTA)

ASEAN has a membership of 10 countries namely Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.The primary goals of AFTA seek to:

         Increase ASEAN's competitive edge as a production base in the world market through the elimination, within ASEAN, of tariffs and non-tariff barriers; and

         Attract more foreign direct investment to ASEAN.

The Common Effective Preferential Tarrif (CEPT) Scheme

Unlike the EU, AFTA does not apply a common external tariff on imported goods. Each ASEAN member may impose tariffs on goods entering from outside ASEAN based on its national schedules. However, for goods originating within ASEAN, ASEAN members are to apply a tariff rate of 0 to 5 percent (the more recent members of Cambodia, Laos, Myanmar and Vietnam, also known as CMLV countries, were given additional time to implement the reduced tariff rates). This is known as the Common Effective Preferential Tariff (CEPT) scheme.

ASEAN members have the option of excluding products from the CEPT in three cases: 1.) Temporary exclusions; 2.) Sensitive agricultural products; 3.) General exceptions. Temporary exclusions refer to products for which tariffs will ultimately be lowered to 0-5%, but which are being protected temporarily by a delay in tariff reductions.

Sensitive agricultural products include commodities such as rice. ASEAN members have until 2010 to reduce the tariff levels to 0-5%.

General exceptions refer to products which an ASEAN member deems necessary for the protection of national security, public morals, the protection of human, animal or plant life and health, and protection of articles of artistic, historic, or archaeological value. ASEAN members have agreed to enact zero tariff rates on virtually all imports by 2010 for the original signatories, and 2015 for the CMLV countries.

Liberalize Tariffs:

- The FTA will liberalize tariffs on about 4,000 items accounting for nearly 80% of trade between India and ASEAN. Electronic goods, chemicals, certain capital goods and some categories of textiles are among the items covered.  

- When the agreement becomes effective, from Jan 1, 2010, tariffs on the products covered will sink to zero between 2013 and 2016.

- A bilateral safeguard mechanism will address any sudden surge in imports with safeguard tariffs to protect domestic industries for a period of four years.

Countries that agree to eliminate tariffs among themselves:

         Brunei

         Indonesia

         Malaysia

         Philippines

         Singapore

         Thailand

         Myanmar

         Cambodia

         Laos

         Vietnam

Regular Observers

         Papua New Guinea

         Timor-Leste

The most recent ASEAN meeting was observed also by:

         China

         Japan

         South Korea

         India

         Australia

         New Zealand