The Free Trade Agreement (FTA) between Thailand and India will provide tax privilege benefits to at least another 900 Thai items for goods categorised under ‘Product Specific Rules’ (PRS) and merchandise needing Rules of Origin requirements, according to Thailand’s Trade Negotiations Department director-general.
Thai representatives, led by Director-General Srirat Rastapana, recently went to India for to meet their Indian counterparts at the 21th Thailand-India Trade Negotiating Committee in the capital, New Delhi, to negotiate free trade, services, investment, and other economic cooperation between the two nations.
Other benefits from the negotiation included creative economy, construction, tourism, and the development of small- and medium-sized enterprises (SMEs).
Beginning in 2004, the Thailand-India Free Trade Agreement covered trade in goods by 2010. To speed up tariff reductions, both countries agreed to implement an Early Harvest Program (EHS) for 82 items of merchandise which had tariffs reduced to 0 per cent –entirely removed– since Sept 2006.
Bilateral negotiations later stopped, as India needed to prioritise its free trade with the Association of South East Asian Nations (ASEAN).
Thailand and India resumed negotiations in Dec 2010 and agreed the bilateral FTA with improved benefits to the ASEAN-India FTA, complying with Thailand’s goal to become India’s partner at a strategic level, for instance, increasing number of goods to penetrate market and the period of tax reduction and/or cancellation faster to that of the ASEAN-India FTA.
India is Thailand’s number one trading partner in South Asia and is the door for Thailand to other markets in the region such as Nepal, Bhutan, Sri Lanka, and Bangladesh. In the world market, India is Thailand’s 17th ranked trading partner and number 11 as an export market.
Bilateral trade between the countries in the first half of 2010 was valued at US$4.1 billion, a 29 per cent increase year-on-year. Of the total, Thailand’s exports to India were worth $2.6 billion, while its imports from India were $1.5 billion. (MCOT online news)
Mr. Abhisit Vejjajiva, the Prime Minister of Thailand, paid a State visit to India during 4-5 April 2011 at the invitation of Dr. Manmohan Singh, the Prime Minister of India. Both leaders agreed to increase the cultural interaction, connectivity and enhancement of trade and economic through the bilateral and regional frameworks viz. ASEAN-India, BIMSTEC and MGC. It was also decided to increase the trade between two countries from its 2010 figure of $6.7 billion to its double in 2014
When the former prime minister of Thailand, Pol. Lt. Dr. Thaksin Shinawatra, visited India during November 26-29, 2001, the leaders of both countries agreed to expend economic cooperation in trade and investment, and set up a joint working group to study the feasibility of establishing a Thailand – India free trade area.
The Joint Working Group held four rounds of meetings between May and December of 2002, and concluded that a free trade agreement would create mutual benefits in expanding trade, investment, and economic cooperation in areas, such as tourism, education, finance and banking, health, aviation, and international transportation. In addition, Thailand would benefit from expanded trade and reduced tariffs on exports to India, particularly garments, leather products, chemicals, rubber, plastics, metals, automobile and parts, and electrical goods
Following the outcome of the study, both parties established a Joint Negotiating Group to develop the framework agreement with the aim to establish a Thailand – India Free Trade Area for trade in goods, services, investment, and economic cooperation. The negotiating group convened six meetings between December 2002 and October 2003.
On October 9, 2003, Ministers of Commerce of both countries signed the framework agreement.
An India – Thailand Trade Negotiating Committee was set up to discuss details under the Framework Agreement and formulate a free trade agreement as well as expand economic cooperation between the two countries.
Expert Groups have also been set up to negotiate specific areas of the agreement, for example, rules of origins of goods, dispute settlement mechanisms, and trade in services and investment. These expert groups report their conclusions to the Trade Negotiating Committee.
Significant Framework Agreement to establish a free Trade Area between Thailand and India
The Framework Agreement covers the liberalization trade in goods, trade in services and investment, as well as expansion of economic cooperation
Trade in Goods:
Under the Framework Agreement, it was agreed that Thailand and India commence the negotiation on Trade in Goods in January 2004 in order to establish the India – Thailand FTA covering trade in goods by 2010. Initially, with a view to accelerating tariff reduction, both countries agreed to implement an Early Harvest Program (EHS). The tariff reduction or elimination of the remaining products other than those under the EHS will be categorized into two tracks, namely Normal Track and Sensitive Track.
Trade in Services and Investment:
Under the Framework Agreement, it was also agreed that the negotiations on Trade in Services and Investment be started in January 2004. Both sides concurred to instigate a progressive liberalization of Trade in Services and an establishment of open and competitive investment regimes that facilitate and promote investment within and between the two countries.
– Economic Cooperation: Thailand and India agreed to promote and enhance economic cooperation in the areas that would be beneficial to both countries, such as information and communication technology, tourism, banking and finance, healthcare, construction, etc.
Opportunities for Indian Manufacturers in ASEAN
Indian exports largely mirror those of ASEAN states, such as rice, electrical equipment, and clothing and accessories. However, there are still sectors where Indian exporters can potentially exploit market needs – wheat exports, the digital economy, and healthcare.
The economic partnership between India and the Association of Southeast Asian Nations (ASEAN) has continued to strengthen since the economic relationship began in 1992 and with the ASEAN-India Free Trade Agreement (AIFTA) coming into effect in 2009.(more…)
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