Nothing to fear

The clarifications given by Prime Minister Manmohan Singh on the proposed India-ASEAN Free Trade Agreement (FTA) should suffice to dispel the misgivings about its adverse impact on the fishing, plantation and traditional sectors in India, especially in Kerala, Karnataka and other coastal regions. The apprehensions were based on the prospect of cheap import of varieties of fish, rubber, palm oil, pepper, coffee, coir products, etc which would hurt the domestic sectors and create even livelihood problems in these sectors after the FTA comes into force. But the fears are misplaced because there are enough safeguards in the agreement to protect the interests of Indian farmers, fishermen and others. Besides, a committee of ministers will make suggestions for strengthening the domestic sectors.

The negotiations on the FTA dragged on for many years in order to put in place provisions which would prevent the country from being flooded with imports harmful to India’s interests. There are 489 items on the negative list, for which there will be no duty cuts. There are a number of items on the Highly Sensitive List which will invite modest tariff reductions for 10 years. The period gives enough time to improve the productivity, quality and price competitiveness of Indian products. The prospect of competition in future should become an incentive to improve the performance of the country’s traditional sectors which now suffer from inefficient practices, outdated procedures and other problems. The FTA should be taken as an opportunity to cut costs and make the domestic sector healthier. It is unwise to erect protectionist walls when trade and economic growth thrive only across open borders.

The overall benefit for the country from the FTA will be enormous because ASEAN is the most dynamic trade bloc in the world. FTAs provide opportunities to improve trade and boost economic growth, especially when there is uncertainty about the conclusion of the Doha Round of trade negotiations. The FTA with ASEAN will help India to improve its economic and political profile in a region to which it has paid special attention in the recent past. The draft FTA, which has been approved by the Union cabinet, is due for signing in December. It should not suffer further delays.

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