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Thailand: Business worried about India FTA

The Nation December 15, 2012

Business worried about India FTA

Petchanet Pratruangkrai,
Achara Pongvutitham

Private sector concerned about opening of professional labour market; Yingluck reportedly keen to wrap up full free-trade deal soon

The private sector has asked Prime Minister Yingluck Shinawatra not to announce any agreement to proceed with a bilateral free-trade pact with India, expressing particular concern over the country’s request that Thailand open its market to Indian professional workers.

"If the prime minister agrees with India to proceed with a Thailand-India free-trade deal, it means the government has committed to all [aspects]. However, the government should seriously consider this sensitive issue, as India has a huge population, [a fact] that would affect the Thai economy," said a source at the Thai Chamber of Commerce.

The same source said Yingluck had ordered officials to wrap up the bilateral free-trade agreement. She has scheduled a meeting with her Indian counterpart, and this issue will be on the agenda, the source said.

Yingluck will participate in the Asean-India Commemorative Summit to be held in New Delhi from December 20-22. While there, she will jointly celebrate 20 years of relations between Asean and India.

Thailand and India formed an FTA on September 1, 2004, through an early-harvest scheme featuring 84 items coming under zero tariff. The two countries want to proceed further with a comprehensive FTA, but India has offered only 59 items for tariff reductions, much lower than Thailand’s proposed 150 items.

India wants Thailand to open its labour market to higher-educated professional workers such as doctors and engineers, as India has a surplus of such manpower. Critics have warned, for example, that even with Thailand’s stringent requirements for obtaining a local licence to practise medicine - which include passing a Thai-language exam - many Indian doctors will be qualified to work in the Kingdom, given the sheer size of the country’s population.

The source said Thailand should wait for results of the Asean-India FTA talks before making any commitment to New Delhi. Asean and India are currently holding final discussions in Jakarta on an FTA on services and investment, with India strongly pushing Asean to open its market to India’s general job seekers.

"If Asean refuses such a proposal from India, Thailand should say no as well," said the source.

The Thai government should have a clear policy on the FTA, which it expects to complete by next month, the source said.

"The negotiation of trade in goods is advancing to a satisfactory outcome; the issue of professional workers is the only major obstacle," the source said.

The investment issue poses another hurdle for the Thai-India FTA talks, as India offers fewer protection measures for Thai businesses, the source said. The Thai private sector has asked the government to consider thoroughly the positive and negative effects of bowing to India’s requests.

"The opening of markets in any sector - be it trade or investment - should not be rushed, but needs to be balanced to benefit both partners. If we stand to lose, we should not agree with any deal," said the source.

A former trade-negotiation source said the negotiations with India had been very tough. India has focused strongly on its own benefit and pushed its advantages over its trading partners with a lot of bargaining, the source said.

"Thailand should have a strong stance and be well educated on the positive and negative points to be gained from the bilateral FTA, when compared with other trading partners. The government now is heading to negotiate bilateral free-trade agreements, rather than multilateral talks as in the past, so they cannot be aware of the overall benefits," said the trade-negotiation source.

 source: The Nation