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India, Thailand sign pact for early harvest scheme

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The Minister for Commerce and Industry, Mr Kamal Nath, exchanging documents with the Commerce Minister of Thailand, Mr Watana Muangsook, after signing a protocol to implement the early harvest scheme under the Framework Agreement for Trade in the Capital on Monday. - Ramesh Sharma

New Delhi , Aug. 30

INDIA and Thailand on Monday signed a protocol to implement the early harvest scheme (EHS) under the framework agreement on free trade area (FTA), which was flagged off by the Commerce Ministers of both countries last year.

The key elements of the framework agreement encompass FTA in goods, services and investment and areas of co-operation. It also provides for an EHS under which 82 items at a six-digit level of harmonised system of common list to both sides have been agreed for complete elimination of tariffs on a fast-track basis, over two years.

The list covers approximately seven per cent of the bilateral trade and the import of these items from each other will now enjoy 50 per cent duty relief for the first year beginning September 2004. The duty relief will be extended to 75 per cent of the existing duty on these items from September 2005. Imports of these items from both these countries will be free of all duties beginning September 2006. Though, as per the framework agreement, the EHS was to start from March 1, 2004, the interim rules of origin for implementing the EHS was delayed. With the `rules of origin' having been firmed up to preclude third-country products taking undue advantage of preferential trading facility, both sides have resolved to begin the first phase of duty concession from September 1, 2004.

The items that qualify for zero-day in two years from both the countries range from fresh mangoes, grapes, apples, crab (prepared or preserved) to chromium ores and concentrates, other acrylic polymers in primary forms, precious stones (other than diamonds), semi-precious stones, unworked, sawn or roughly shaped, dust and powder of diamond, articles of jewellery and parts thereof, alloy pig iron, helical springs of iron or steel, fans table, floor, wall, window, ceiling/roof fans with self-contained electric motor of output of over 125 watt, other kinds of fans, parts of air/vacuum pumps, compressors and fans, compression-type refrigerators, household, spindles, spindle flyers and spinning rings.

Other products are office machines, machinery for moulding/retreading pneumatic tyres or for forming inner tubes, ball bearings, line telephone sets with cordless hand sets, parts of telephonic or telegraphic apparatus, printed circuits, cathode-ray TV picture tubes including video monitor tubes, gear boxes and wrist watches electrically operated and parts of seats whether or not convertible into beds.

Mr Kamal Nath, the Union Commerce & Industry Minister and Mr Watana Muangsook, Minister of Commerce for Thailand, signed the protocol. Mr Kamal Nath said the signing of protocol marked a historical landmark in the bilateral relations and a "milestone" in India's `Look East Policy'.

Mr Kamal Nath said the agreement would help in augmenting the formation of joint ventures and investment flows in the counties and hoped that business communities in both countries would take advantage of this. Total trade between India and Thailand almost doubled from $777.15 million in 1999-2000 to $1.4 billion last year.

Mr Muangsook, removed all doubts about the effectiveness of the FTA and the EHS by asserting "without mutual benefits perceived by the negotiation teams no other pressure is capable of forcing India and Thailand to be bound under this FTA framework. Our two countries only jump into a concluding co-operation under the best interests of their nation".

This point was also stressed by Mr Kamal Nath in his interaction with the media. He said the Indian industry's fears on this score were unfounded.

The Commerce Secretary, Mr Dipak Chatterjee, in his welcome address said the framework agreement envisaged not just a free trade area in goods but also negotiations leading to liberalisation of services and investment rules and enhanced economic co-operation in several sectors.

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