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BIMSTEC finalizes dispute resolution rules

Kathmandu Post

BIMSTEC finalizes dispute resolution rules


28 December 2005

KATHMANDU, Dec 27 - Trade Negotiation Committee has finalized rules for settling disputes in BIMSTEC free trade agreement. It has, however, failed to converge on the percentage of value addition for rules of origin.

The 10th round of the TNC, which ended in the capital on Tuesday, also initiated negotiations on the bloc’s FTA framework accord for services and investment. "TNC has narrowed down differences significantly," Naindra Prasad Upadhyaya, joint secretary of Ministry of Industry, Commerce and Supplies told the Post.

He stated that the members would settle all the remaining issues and finalize the free trade agreement deal on goods trading during the 11th TNC meeting, scheduled for February 2006 in Bangkok.

According to sources, except for the date of enforcement, TNC has concluded negotiation on Dispute Settlement Mechanism (DSM). The members have decided to set up a high-level third party mediation committee to settle trade related disputes as and when those arise. Nepal, India, Bangladesh, Bhutan, Sri Lanka, Myanmar and Thailand are members of the bloc.

"The TNC’s sub-group negotiating on criteria of rules of origin could not agree on the percentage of value addition for both general rule as well as product special rule (PSR)," said the source. It, however, agreed to limit commodities under PSR to 400 items, he added.

Members varied on percentage of value addition. While LDCs pressed for 30 percent, developing countries pushed for 40 percent value addition criteria.

"The sub-group has been asked to settle this difference in the next meeting, agreed to be held in New Delhi before the TNC meets," said the source.

The members, meanwhile, agreed to open 10 percent of total tariff lines under the fast track of trade liberalization program. Tariff of items included in its final list would have to be slashed directly to zero to 5 percent as agreed upon during the ongoing negotiations.

So far, only Nepal has forwarded the list of items it would open under fast track. "However, its list includes just 3 percent items and needs revision," said the source.

Tariffs of other items, however, could be reduced gradually to zero to 5 percent level within 10 years from July 2006, when BIMSTEC FTA on trade in goods will come into place.

"TNC also negotiated on items included in negative list, requesting each other to exclude items of their export interest from the list," said the source. It also agreed to exchange exclusion requests and notify decisions through electronic transmission in order to speed up the negotiation. The members have agreed to limit items in the sensitive list to 20 percent of the total tariff lines.

TNC also decided to prepare a draft of investment promotion and protection agreement, and exchange lists of service sectors they would open to expedite negotiation on BIMSTEC FTA on service trade and investment, according to the source.