India, Thailand iron out trade glitches

To reduce custom duties on 82 items the two countries import from each other from Sept-04.

India and Thailand on Friday entered into an understanding on allowing a phased reduction of Customs duties on 82 items the two countries import from each other from September 2004.

The import of these items by India and Thailand from each other will now enjoy a 50 per cent duty relief for the first year beginning September 2004.

The duty relief will go up to 75 per cent of the existing duty on these items from September 2005. Imports of these items from September 2006 will be duty-free.

An understating on safeguard clauses to prevent flooding of goods from China through Thailand "" the two countries already have a free trade agreement "" has also been reached.

Accordingly, all items from Thailand must fulfill a 40 per cent value-addition norm (local content) before they can take advantage of the lower duty regime under the new free trade arrangement.

The goods to enjoy this duty relief include items from a wide range of sectors like agriculture, petrochemicals, engineering and consumer goods. Some of these items are mangoes, grapes, apples, durum wheat, salmon, salt, polyurethanes in primary forms, plywood, jewellery, alloy pig iron, non-alloy aluminium, parts for internal combustion piston engines, fans, air-conditioners, refrigerators, office machines, ball bearings, telephone sets, printed circuits, TV reception sets, gear boxes and wrist watches.

The finalisation of the list followed the completion of the negotiations for implementing the early harvest scheme under the framework agreement for establishing a free trade area between the two countries.

Negotiators of the two countries have finalised a protocol to this effect, which will be signed by the commerce ministers of India and Thailand next month during the visit of the Thai commerce minister, Watana Muangsook, to New Delhi.

Removing all the differences the two countries had on the rules of origin, the negotiators have now proposed that the full agreement on the free trade area would take effect from 2010.

India's current trade with Thailand is estimated at over $1 billion and Commerce Minister Kamal Nath, who flew in here from Geneva this morning to conclude these discussions, said the new agreement would help further boost two-way trade.

Nath said two amendments were introduced in the protocol before it became acceptable to both parties. One pertained to the inclusion of the 40 per cent value-addition (local content) norm and the other was a clarification to the Thai authorities that there was no specific need for entering into separate free trade arrangements with each state in India as the states are bound by the trade treaty concluded by the central government.

The big endorsement of the conclusion of the protocol came from Prime Minister Manmohan Singh, who stated in his meeting with Thai Prime Minister Thaksin Shinawatra today that the early harvest scheme indicated the first step towards the widening of economic co-operation between South Asia and the Southeast Asia.