'In-principle' trade pact with Japan likely during PM's visit

New Delhi, Oct 15 (PTI) India and Japan are likely to reach an "in-principle" pact on slashing trade barriers, while the Rs 240 billion Delhi-Mumbai freight corridor project will get a shot in the arm during Prime Minister Manmohan Singh's visit to Tokyo later this month, a Japanese official said.

Singh's scheduled visit to Japan from October 21 is
likely to have a busy economic agenda, mainly comprising
review of the Comprehensive Economic Partnership Agreement
(C.E.P.A.) and a Japanese loan of about Rs 160 billion for the
Indian Railways freight corridor project.

While reports suggested that the two sides may not be
able to sign a full-fledged (C.E.P.A.)due to persistent
differences, It will be fair to say that an in-principle
agreement could be reached during the Prime Minister's visit,
Keizo Takewaka, Minister of Economic and Development in the
Japanese Embassy here told PTI.

India and Japan have been negotiating a (C.E.P.A.) for
the last two years with an objective of giving a boost to the
10 billion dollar bilateral trade by way of eliminating and
slashing duties on as much as 90 per cent of the goods and
services traded between the Asian countries.

While the trade negotiators have completed several rounds
of discussions, they have not been able to reach a complete
agreement. Both the sides have areas of concern that include
the rules that will govern the value added third country
goods, quality standards and the negative areas to be shielded
from the breaking of the tariff wall.

The C.E.P.A. will not only cover merchandise goods but
also services and investment enabling easier movement of
people and foreign direct investment between the two
countries.

Since services sector contributes about 55 per cent of
India's Gross Domestic Product, New Delhi is actively pursuing
opening of the sector with its trading partners - be it
Association of South East Asian Nation (A.S.E.A.N.)or European
Union.

India's demand for easier movement of people is often
taken as an immigration threat resulting in a resistance from
the partners.

However, Japan promises to be pragmatic on the issue. "We
are flexible in movement of people," Takewaka said adding
Japan has already an arrangement in place for "mutual
recognition of educational qualifications."

As for the Railways dedicated Delhi-Mumbai freight
corridor, Takewaka said the project would receive "a strong
political support," from Japan as Singh meets new Japanese
Prime Minister Taro Aso.

While Japan has agreed in-principle to fund the project
on a nominal interest rate of 1.2 per cent, the two countries
have to yet seal the agreement.

Takewaka said it is in the interest of the two countries
to increase the economic engagement. While India can reduce
its growing trade deficit through a greater market access in
Japan in areas like agri products and pharmaceuticals, Tokyo
would like to engage more with the second fastest growing
economy in the world.

In comparison to Japan, China has been more aggressive in
enhancing trade with India while South Korea has been
pro-active in direct investment. China is set to achieve a
trade volume of 50 billion dollar this year, close to the
European Union - India's largest trading partner.

"Given the smaller size of Korea, they have been more
aggressive in investing in India," Takewaka conceded. PTI PC
SAK