The recently concluded fifth Indo-Asean summit at the Philippine city of Cebu did not quite result in a breakthough in the talks on a free trade agreement between the two. However the discussions were significant in themselves. Last May, the talks stalled over some seemingly intractable issues connected with trade in specific agricultural products that are deemed sensitive. India's negative list, pretty long to begin with, has always been a contentious factor, although it has been pruned down from a high of 1400 in the original offer to 991 last year and to 490 at the recent summit. In what is seen as a major step forward both India and Asean have agreed to a broad stipulation that trade in the items figuring in their respective negative lists should not exceed 5 per cent of the total trade. This should provide for considerable flexibility. For instance, it will enable trade authorities to decide on individual quotas depending on particular circumstances. It is in the issues connected with trade in the four sensitive items crude and refined palm oil, tea and pepper that a higher level of accommodation by both sides is needed. India has agreed to slash import duties on these commodities by 50 to 60 per cent but only by 2022. Besides, India has also sought "a standstill period" of five years before the duty reductions take effect. The member-countries of Asean, especially Malaysia and Vietnam who are large producers of palm oil and pepper respectively, have strong reservations over the lengthy phasing-out period. However, India's concerns are also understandable. Large-scale imports of these items, without the tariff walls, it is feared, will hurt domestic producers of vegetable oils and pepper.
As with the stalled Doha round of multilateral trade, it is a resolution of the agriculture issues that will take the talks forward. While a new deadline for the Indo-Asean trade talks has been set for July, it is not clear how the two parties will start moving towards a compromise. For India, the latest deadlock over specific farm products is a reminder of the vast and concerted effort needed to boost agricultural productivity. Global competition is bound to come sooner rather than later and the domestic farm sector should be strengthened to stand on its own. Indian trade diplomats have a lesson or two to learn from China. Although starting its dialogue with Asean much later than India, China has moved forward rapidly and clinched an agreement on eliminating trade barriers by 2010-15. It has also inked a package on services that will become operational by this year.