logo logo

India restarts free trade talks with Bimstec

Economic Times | 27.10.2006

India restarts free trade talks with Bimstec


NEW DELHI: After months of inaction, negotiations on the free trade agreement (FTA) between India and Bimstec countries (Bangladesh, Bhutan, Myanmar, Nepal, Sri Lanka and Thailand) have restarted with meetings taking place both at the official and business level in Bangkok this week. The meetings focusing on ironing out contentious issues like rules of origin, sensitive lists and non-tariff barriers aim at accelerating the negotiations so that the agreement is in place before the Bimstec Summit in February next year.

Speaking to ET, official sources said since the July ’06 deadline for concluding the agreement was missed, members wanted the pact to be finalised before the heads of state from Bimstec countries participate in the New Delhi summit in February ’07. “The India-Bimstec FTA is very important as unlike Safta it also provides for an agreement in services and investment which is to be negotiated later,” an official said.

Talks between India and Bimstec are stuck mainly due to disagreement over the number of products to be subject to liberal rules of origin (preferential list of items ). Since ROO determine which products should qualify as originating from member countries and hence get preferential access, relaxed rules could result in third country goods flowing in on favourable terms. While India wants that the preferential list of items to be short, its Bimstec partners want to accommodate a large number of items in the list.

Other problem areas include the finetuning of the negative list of items which are to be excluded from tariff reduction commitments under the FTA and removal of non-tariff barriers. India’s intra-regional trade with Bimstec countries increased from 4.12% in ’01 to 6.61% in ’03.

According to studies cited by the commerce ministry, promoting rapid tariff liberalisation in the Bimstec region could increase India’s exports to Bimstec countries by 74% in comparison to the figures clocked in ’03.

Bimstec has also agreed to work towards improved transport links between member countries. Setting up a Bimstec energy centre in India to strengthen cooperation within the energy sector is also in the pipeline. Members have agreed to strengthen cooperation in grid connectivity, gas pipelines, hydro power, renewable sources of energy, energy efficiency and access to energy in all areas.

 source: Economic Times