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Delhi shifts aim to bigger ball

Bangkok Post | 1 December 2007

Delhi shifts aim to bigger ball


The much-hyped free trade area (FTA) negotiations between Thailand and India seem to be stalling, as the latter’s focus has shifted toward the much-bigger Asean-India FTA, a leading Thai negotiator says.

"We have been trying to push India to send us the new list of duties so that we can calculate from our side but it seems as though they are more focused on concluding the Asean-India FTA," Chana Kanaratanakilok, the deputy director general of the Department of Trade Negotiations at the Commerce Ministry told the Bangkok Post.

"From our side, we are totally ready to implement it and all things have been worked out, but a trade deal is a bilateral one, if one side is not ready then we cannot force upon them."

Mr Chana said that if India was looking for a trade deal with the region, it would be a long and tedious process that could take years before a pact with the 10- member Asean bloc was reached.

As it stands, Asean will not resume negotiations until India comes up with a better and a more progressive offer.

Asean groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Burma, the Philippines, Singapore, Thailand and Vietnam.

Negotiations have been stalled because of what Asean says is a list of 854 products that India wants to exclude from tariff cuts. India had submitted a list of 1,414 products, while Asean’s target number is 400.

Asean officials say they want to see more flexibility from India, which has been keen on protecting its key sectors such as agriculture and textiles that provide the livelihoods for millions of people.

India has been undertaking various separate negotiations with Asean states, including Thailand, Indonesia and Malaysia, but none have seen any conclusion, except the early harvest of 82 items with Thailand that started in 2003.

In August 2006, India proposed a separate deal on palm oil imports with Malaysia and Indonesia to speed up free trade talks with the bloc as a whole.

The two Asean countries produce about 80% of the world’s crude palm oil. India currently imposes 70% tariffs on crude palm oil and 80% on refined palm oil. It has proposed to reduce those to 50% and 60%, respectively, but Malaysian trade minister Rafidah Aziz has criticised the proposed cuts, which would run for more than 16 years, reports say.

There is no way that a multilateral agreement such as the one with Asean can move faster than bilateral agreements as each country must ratify the content and then send it to Asean to negotiate further, whereas bilateral deals can move more quickly, Mr Chana said.

"If the Thailand-India deal does not go through now, it could be a long while before it gets back on the radar of the new government as it would want to study everything again and gradually move forward, whereas we are totally ready to move forward and are awaiting one document from the Indian side," he said.

He believes passage of the India pact could be fairly smooth since many public hearings have been conducted, despite Article 190 under the new constitution that requires the passage of such laws by the parliament and public participation for any international trade negotiations.

The consensus until recently was that the trade deal with India could be signed by the end of this year, after years of talks.

"We have had a very constructive discussion with Thailand recently and are hopeful that it would be possible to sign the FTA on goods before the end of this year," Pranab Mukherjee, India’s External Affairs minister, said in Bangkok recently.

However, Thai Commerce Minister Krirk-krai Jirapaet said in October that a November deadline would be final as the military-installed government of Gen Surayud Chulanont would have to hand over power to an elected government following the poll set for Dec 23.

Trade talks between India and Thailand started more than three years ago. An early-harvest scheme was agreed to in 2003. The early-harvest pact, covering just 82 items, has helped push trade between the two countries up by more than 125% since 2003 to $3.8 billion in 2006. A value of more than $4 billion is expected this year.

Mr Chana said that even if India does not sign the FTA right now, Thailand would continue to use the existing early harvest agreement, which has favoured Thailand so far.

"Using the early harvest we have managed to achieve a surplus of more than $500 million and exports have increased more than 100%," he said.

"What we wanted was to open up trade further and that could eventually benefit Indian businesses, but if they do not want to expedite the process then it’s fine with us. We will continue to harness what we can from the early harvest and this will be in Thailand’s favour."

 source: Bangkok Post