Trade team puts Thai FTA on top of agenda

New Delhi, Nov 20 | Updated: Nov 21 2005, 05:30am hrs
The trade negotiations committee working on the India-Thailand free trade agreement (FTA) will meet this week to sort out issues related to rules of origin (ROO) and negative lists which is holding back implementation of the agreement.

According to sources, India is trying hard to sort out the ROO problem early so that Thailand does not get influenced by the terms India agrees to in the proposed India-Asean FTA being simultaneously negotiated.

ROO refers to the criteria for determining which product should qualify as an original product of member countries participating in the agreement and get preferential tariff treatment.

Indias huge negative list of more than 1,000 products is another bone of contention. The negative list has to be shortened considerably, an official from the Thai embassy in India told FE.

Although Thailand had agreed to Indias condition of a twin criteria for determining ROO in the early harvest scheme which was implemented in 2004, it subsequently changed tracks and demanded that for the FTA, it should have just the value added criteria on the lines of the Asean agreement.

India, in both negotiating forums, has proposed the use of twin criteria for determining ROO which includes value added method and change in tariff heading (CTH).

The value added criteria sets down the minimum percentage requirement for value addition to foreign inputs by member countries for qualifying for preferential tariff treatment.

While the accepted norm is 40%, Thailand is insisting on a 30% value addition which India is not comfortable with. Thailand may use this as a bargaining chip for accepting Indias proposal of a twin criteria which also includes the CTH which calls for specified physical transformation of an imported input.