Economic Times 14 August 2006

Indo-Thai FTA unlikely to take off this year

AMITI SEN

NEW DELHI; It seems unlikely that India and Thailand would graduate to a full-fledged free trade agreement (FTA) this year despite the successful implementation of the early harvest programme. The political turmoil in Thailand leading to elections in mid-October coupled with the uncertainty in FTA talks between India and Asean has pushed the India-Thai FTA talks to the backburner.

Speaking to ET, official sources said that while the FTA was supposed to be implemented earlier this year, no move has been made by Thailand to conclude the talks. The implementation of the FTA had already been postponed once from March ‘05 and the failure to implement it even in ‘06 would give a serious setback to the bilateral process. The EHP preceding the FTA was implemented in September ‘04.

Although Thailand has expressed dissatisfaction over India’s negative list of items and the rules of origin proposed by the country for the FTA, no meetings have been scheduled to iron out the issues. The sources said that since the political situation in Thailand is expected to stabilise after the mid-October elections, the Thai negotiators are preferring to wait till a stable government is in place before taking a decision on the FTA fine-print. The uncertainty looming large over the India-Asean FTA is another reason why Thailand wants to wait.

Even before the India-Asean talks reached its current state of abeyance, Thailand had already made it clear that it wanted to give up the stringent rules of origin norms being followed under the EHP in favour of a less strict ROO that India had agreed to keep in the FTA with Asean. ROO lays down the rules for determining which product originates from the partner country and should qualify for benefits under the FTA.