Indo-Thai FTA talks gather momentum
Economic Times | 16 May 2007
Indo-Thai FTA talks gather momentum
KG NARENDRANATH
NEW DELHI: India has sought a major expansion of the opportunities on offer for Indian professionals in Thailand, as the two countries rush to conclude the negotiations on a free-trade agreement (FTA) comprising trade in goods and services and investment, which is likely to be signed during Thai premier General Surayud Chulanont’s visit to New Delhi in June. If the move fructifies, professionals from a wide range of disciplines would benefit as their degrees would be recognised by the Thai government. These would include IT professionals, engineers, doctors, nurses, chartered accountants, among others, but not lawyers.
The commerce ministry has already given a somewhat exhaustive list of “middle-rung colleges and institutes” to the Thai authorities with a request to grant them recognition for smoother access of Indian professionals to the Thai services market. Currently, Thailand recognises a clutch of top-notch Indian educational institutes like IITs, IIMs, etc but no automaticity of recognition is offered to a large number of others which stick to comparable standards of education.
India is not in a position to ask for access for Indian lawyers to the Thai market as it is reluctant to open its market for legal professionals.
India and Thailand had adopted what is called an early-harvest scheme (EHS) in 2004, under which tariffs on 82 items had been eliminated by September last year. The scheme has resulted in a surge in trade between the two countries, with India’s exports of these items to Thailand jumping 50% in 2005-06 over the year before and imports galloping almost 80%. In fact, stronger trade in these 82 items pushed India into a $140-million trade deficit with Thailand, bucking the trend of a trade surplus with the southeast Asian country in the previous years.
The early-harvest scheme was to be part of a broader FTA framework to be set up in future but the process towards clinching FTA had been in limbo till Thai trade minister Krirk-Krai Jirapet initiated a dialogue during his recent Delhi visit. One reason for this was the political turmoil in Thailand last year. The renewal of Thai interest in FTA is in the wake of the reports that the proposed India-Asean FTA is unlikely to be signed in July, as envisaged earlier, and could be deferred to the year-end. While Asean as a whole seems to have got cold feet in clinching an FTA with India, Thailand, which is part of Asean, is an exception.
According to official sources, the talks on India-Thai FTA is now on almost helter-skelter. The two sides are discussing inclusion of as many as 4,000 items in the normal track for tariff elimination under the proposed FTA. This would imply that tariff on majority of these items would be eliminated by 2011 and the rest by 2018, a commerce ministry official told ET. There could be a 500-strong negative list which both sides would keep. Items on the negative list would not be subject to any tariff cut/elimination. The negative list would comprise agricultural items, including rubber and pepper. Besides, there could be another via media grouping of items called sensitive list with 5,000-6,000 items on which the tariffs would not be eliminated but reduced to 5% by 2018. This list would include a host of textile items also. This is a proposal akin to what is under discussion in case of FTA with Asean.
While Thailand government is the initiator of the current round of negotiations, New Delhi has been keen to reciprocate. India has no worries over running a trade deficit with Bangkok, despite the early-harvest scheme experience. “Both the sides will benefit from FTA,” the official said.
The early-harvest scheme had covered just 7% of the bilateral trade between the two countries. In 2005-06, India’s exports of goods to Thailand stood at $1,062 million while imports were higher at $1,202 million.
