India, Japan differ on safeguards in trade pact

NEW DELHI: As Japanese trade minister Akira Amari begins his India visit tomorrow, official-level talks on a free trade agreement last week ended with wide differences as New Delhi demanded extra safeguards for its domestic industry but Tokyo opposed such concessions.

Officials of two countries met here last week holding discussions on coverage of trade in goods and services, investment in Comprehensive Economic Partnership Agreement and ensuring how safeguards can be provided against exploitation of the agreement by third countries.

Indian negotiators wanted double protection to prevent misuse of the trade pact -- through Rules of Origin and Tariff Classification -- but their Japanese counterparts wanted to have only one of the option.

Under Rules of Origin, an item will enjoy duty concessions under CEPA only if an agreed percentage of value addition is done in either of the countries.

However, under Tariff Classification an item gets a different duty concession treatment every time any value addition is done.

India has said it cannot give differential treatment to Japan since these issues have been included in all FTAs that New Delhi has concluded or are under negotiation.

Amari will review the progress of CEPA with Commerce Minister Kamal Nath. The proposal of the Indian government to double the size of Delhi-Mumbai Industrial Corridor to 100 billion dollars will also be placed before him since Japan is funding the project along with the freight corridor.

India and Japan had agreed to launch negotiations on an economic partnership pact after Prime Minister Manmohan Singh visited Tokyo last year. Officials have met once and finalised a framework agreement on modalities. India's exports to Japan in 2005-06 were 2.4 billion dollars and imports 3.5 billion dollars.

Major Indian exports are gems and jewellery, iron ore and marine products while major imports from Japan include machinery, electronic goods and iron and steel.

While India-Japan trade is growing in excess of 20 per cent, it is much less as compared to rate at which the country's engagement with China is growing. India-China trade is expected to touch 20 billion dollars.