Asean agreement

India has signed the ASEAN agreement. Both political parties and observers are in two poles deliberating on justifications and counter-arguments regarding its effect on the agricultural economy of Kerala. While forming a project of national implication why such a wide hue and cry over its implementation in Kerala? The reasons are obvious...Most of the products that come under the project are cash crops and Kerala is one of the topmost producers of them. The rubber itself is a case in point.

asean In course of time, as per the industrial clauses of the project, the Union Govt will be compelled to take away the import duty of the rubber. As Kerala contributes to the major chunk of the rubber production, Kerala will be compelled to face competition from countries like Malaysia. The stiff competition in similar products may pose wide-reaching effects upon our market and the aftermath of which is unpredictable...

The move is to protect the interests of the top brand industrialists. And this will gravely trash the backbone of our poor farmers who even now at stake with multiple handicaps,’’ CPI(M)state secretary MrPinarayi Vijayan says. (In his article written on Deshabhimani newspaper on August 19/August/2009. Flaying the signing of Free Trade Agreement(FTA)India with the Association of south Asian Nations (ASEAN), Kerala Chief Minister V S Achuthanandan quips that it will adversely affect the farmers of the country, particularly in the state.

Hence there is widespread criticism as to the effect of such an agreement will have on the economy of Kerala and at the same time the way it has been finalized and agreed upon by the Union Government without taking into consideration the interests of the state. The FTA is said to have the potential to multiply bilateral trade between India and ASEAN. The content of the ASEAN agreement is that in course of time certain agricultural produces will have to be imported without paying any sort of taxes. And it will open up the general market to the multinational agencies to conquer the comparatively weaker internal markets of Kerala.

There had been little discussion about the ASEAN agreement although the Central government has already decided to implement the same. Even while considering the fact that in this era of globalization, nobody can survive without assimilating the global changes and dynamics of international business and industrial dynamics, the question that which applies to Kerala is that of balance. How far can we balance the prospects of opening up of our markets to ensure quality improvement and at the same time ensure the safety of our farmers and its functional dynamism?.

Hence it becomes a question of choice rather than of necessity. Kerala is definitely going to see the worst effects of it since a number of products produced in Kerala feature on the list of the ASEAN agreement including pepper, rubber, and coffee. But the government should also consider the interests of the poor farmers and small-scale traders as well. In Kerala, they have already started protesting against the agreement. State and central governments should consider these issues seriously and should do everything to protect their interests and save farmers from suicide.

With increasing input cost and labor shortage, only the cultivation of cash crops, because of better returns, has remained viable. ASEAN also has the same produces to market as Kerala has—tea, coffee, pepper, rubber, edible oil, and marine products. Kerala’s apprehensions, given vent to in Parliament and during Cabinet meetings, have been allayed by highlighting the protective steps in the FTA like partial reduction in import tariffs on highly sensitive farm goods, the sensitive list of goods with partial duty cuts (606 products) and a negative list with no duty cuts (489 goods, including 302 farm items).

However, the representatives of the Union Government including Mr. AK Antony assures on every occasion that himself and Mr. Vayalar Ravi are being included in the committee on the ASEAN project and the concerns of the agriculturists of Kerala will be taken into consideration. Moreover, Mr. Antony vouches that the committee will take into consideration the viewpoint of CM MR VS Achuthanandan in this project. And they opine that India cannot take an isolated posture.

The signing of the Free Trade Agreement (FTA) in goods between India and the Association of Southeast Asian Nations (ASEAN) marks a successful completion of hard bargaining by the government under which the 10-member regional trade bloc has agreed to a ‘negative list’ of items that take care of the interests of India’s farm sector as well as its industry.

Pointing out that the ASEAN has not accepted the ‘negative list’ concept in its FTAs with any other country, senior Commerce Ministry officials said it took over five years for the ASEAN to iron out their differences over the tariff structure. A ministry official pointed out that India has managed to safeguard the interests of both its farmers and industry through a large ‘Negative and Exclusion’ list of 489 items, which includes 303 items of agriculture sector; 81 items of textiles sector; 50 items of the auto sector and 17 items of chemical sector.

Moreover, gradual reduction of tariffs has been provided in the FTA, where the duties on 10,885 tariff lines will be reduced between 2010 and 2019 under various tracks and different timelines. While the first four years would see tariff being eliminated on 7,788 tariff lines (mostly with duties from 7.5 to 10 per cent would be reduced on an average by 1.5 to 2 percentage point annually); on 1,252 lines, tariff will be eliminated in seven years (most of which has the duty in the range of 7.5 to 10 percent, will have an annual average reduction of 1-1.5 percentage point), the official said. The Indo-Asian FTA would reduce tariffs to zero in over 4,000 goods, out of the 5,000 that are traded, in phases over the next six to ten years. The merit of such an agreement, implemented without proper caution and safeguard, will go a long way in destroying our indigenous economy and farm sector.