The Hindu Business Line : BIMSTEC Free Trade Area meeting postponed

The issues
Meeting postponed due to delay in response from Bangladesh.
Postponement gives India more time to focus on forthcoming India-Asean Summit.

G. Srinivasan

New Delhi, Nov. 3 The Framework Agreement on BIMSTEC (Bay of Bengal Initiative for Multi-sectoral Technical & Economic Cooperation) Free Trade Area, involving Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand, though scheduled for implementation on goods from July 1, 2006, remains in limbo as some finer details need to be worked out.

Sources in the Government told Business Line here though negotiations were being held by the BIMSTEC Trade Negotiating Committee (TNC) on FTA in goods, services and investment with as many as 15 meetings of TNC with the last one held in Dhaka on September 23 to 26, 2006, much headway could not be made due to some major issues being raked up by one member or another.

The 16th BIMSTEC TNC meeting is scheduled to be held in the Indian capital from November 12 to 16, 2007 but that has been postponed to early next year, with some delay in response from Bangladesh, the sources said. They also added that this has also provided ample time to Indian trade envoys to focus on the forthcoming India-Asean Summit to be held in Singapore on November 21, 2007.

India-Asean FTA

Even the India-Asean FTA, which was to have been operational in July, remained mired in controversy over the obdurate stance of palm oil exporting countries from South East Asia which wanted faster tariff cuts and frontloading of the duty reduction. The sources said that the 10-member Association of South East Asian Nations (Asean) is holding its summit from November 20, followed by Asean plus three (China, Japan and Republic of Korea) and Asean-India Summit on November 21.

As the Prime Minister, Dr Manmohan Singh, is attending this Asean Summit, last-ditch efforts were being made to piece together the broken thread to present a final deal on India-Asean FTA so that this could be launched from January 1, 2008.

When contacted about the postponement of BIMSTEC FTA, the Minister of State for Commerce, Mr Jairam Ramesh, said BIMSTEC was the link for South Asia with South East Asia and to the North East India. He said that this FTA was ‘very important’ for strategic, economic and commercial reasons for engaging our immediate neighbours on a mutually beneficial basis.

Roadblocks

On the issues that hold up further headway in BIMSTEC FTA talks, the sources said they include product coverage of negative list, principle of reciprocity, rules of origin and distribution of products over the normal track elimination and the normal track reduction.

The sources said that on the rules of origin, all members have already agreed for a simultaneous application of CTH (Change of Tariff Heading at the four-digit harmonised system level) plus value addition, with derogation to CTSH (Change in Tariff sub-heading at six-digit HS level) on an agreed list of items. But, members are yet to evolve a consensus on the percentage of value addition.

India and Sri Lanka had proposed 35 per cent value addition (VA) for developing members with 30 per cent VA for least developed countries (LDCs) and LDCs had sought for Product Specific Rules on some items of their export interest of value additions of 25 per cent.

All countries except Thailand have reached a consensus on the General Rule, they said adding that Thailand has been insisting on applying the principle of reciprocity under which if a particular product is in a country’s negative list, it will not get preferential market access in any other member country even if this product was not included in the negative list of the other member country.