People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 07

February 18, 2007

The ASEAN Summit In Cebu


K Rajendran 


THE ASEAN summit ended in Cebu with a number of unanswered queries on different lists of products- the negative, normal, sensitive and the highly sensitive. All the discussions in Cebu were centred on agricultural imports and exports. Prime minister Manmohan Singh and commerce minister, Kamal Nadh appeared somewhat skeptical even about our own stand. On the return journey in the special flight, during the media interaction, the PM introspected on globalisation, begun by him in the early nineties.


“I think there are positive developments in our economy. The proceeds of globalisation have brought gains. Our industry and trade are moving forward at an unprecedented rate. Our economic growth has picked up but at the same time the benefits of growth are not percolating to all sections of our population. I am worried about the fact that growth in the agriculture sector is not what it should be. In the months and years to come, we will focus more on the needs of our rural areas. There are flagship programmes highlighted in the Common Minimum Programme. We have a lot of unfinished business to ensure that the fruits of our development reach all sections and regions of our country.”


While the PM’s wholeheartedness about our agricultural downwardness is realistic, unfortunately it is not reflected in the Cebu Asean dialogues. India-Asean trade amounted to $21.29 billion in 2005-06. India aims to attain $30 billion in the ongoing financial year. India intends to export manufacturing goods. In fact, Asean countries are looking to dump their agricultural products in Indian markets. At the outset of the PM’s visit to the Philippines the ministry of External Affairs narrated our stand in the information booklet for accompanying media, as follows: ‘the main difficulty with regard to the sensitive list relates to four agricultural items, viz, refined palm oil(RPO) CPO, tea and pepper. The present duty on these items are 90 per cent for RPO, 80 per cent for CPO, 100 per cent for tea and 70.5 per cent for pepper. In our latest proposal, there would be no tariff liberalisation for these four products for five years, i.e, till 2012. Thereafter, tariff would be reduced to 60 per cent ad valorem customs duty for RPO and 50 per cent for the other three products in the next 10 years, i.e., up to 2022. ASEAN, particularly Malaysia, would like more concessions on palm oil. Specifically, they are interested in some tariff reduction taking place as soon as the FTA comes in to force’


As the conclusion in Cebu discussions, India and Asean countries decided to include 490 products in the negative list. The negative list would be outside the purview of the ensuing Free Trade Agreement. This amounts to only 5 per cent of the total trade between two sides. In Cebu, Kamal Nadh briefed the media that rubber, coffee, coconut are placed in negative list. But he could not reveal the full text of the negative list, for fear of public outcry.




The main controversy appears to be centering on the sensitive list. According to Commerce Ministry sources, the sensitive list is still not finalised. India’s contention is that this list may include 95 –100 per cent of exports of seven Asean countries and 85 per cent and more for the other three countries. From 2003 to 2007, India handed over three lists to Asean countries. Our first list included 991 tariff lines, later it was pruned to 854, and finally 560 tariff lines. Still it is unclear how many items are round the corner, many of them more likely agricultural products. At Cebu the government ensured its commitment to intermittently curtail the import duties of these items, assuming that tactical reduction of tariff lines of agricultural products could not fuel farmer’s outbreaks.


Discussions about the sensitive list corner on only four agricultural items; viz, refined palm oil (RPO) crude palm oil(CPO), tea and pepper. If everything goes smoothly, the FTA would be signed in July. The real outcome of the sensitive list compromise would be visible only after 2012 ---the already crippled Kerala cash crops would have faced another Himalayan crisis; now-a-days, farmers suicides are very common in Wayanad, Kasargod and Palakkad districts, the FTA with Srilanka has already harmed pepper farmers, many tea estates in Wayanad and Iduki have been closed, due to the import of palm oil farmers are getting ever lower prices for coconuts. Thus this state will have to face a prolonged crisis. How to overtake this crisis? Commerce secretary, G K Pillai answers: “In these liberalised years, India cannot go alone, to override stiff competition, there is only one way that both qualitatively and quantitatively, we should improve our agricultural production. With this purpose the Commerce ministry is planning viable projects.”


Who are the driving forces of this so-called liberalisation? It is a harsh truth that many of the firms exporting Palm oil to India from Malaysia are owned by Indian traders. Similarly, our traders who have links with Srilankan markets are the real beneficiaries of the FTA with Srilanka. In this aspect, this FTA is also not for the benefit of the poor farmers of the third world countries.