Thailand, India push free trade plan

Mumbai: India and Thailand are in negotiations to hasten a free-trade agreement between the two countries. Thai prime minister Surayud Chulanont who is on a visit to India said negotiations with India to forge a trade agreement are ``on track'''' after disagreements over the range of goods to be covered held up the accord.

Chulanont, the army-appointed prime minister, sought to allay Indian fears of political uncertainty, saying there would be no backtracking on Thailand''s return to full democracy. He said prospects for the economy were also bright with GDP growth for 2007 expected to be between 4.0 and 4.5 per cent.

"Thailand and India already possess the necessary resources to make use of our untapped opportunities," said Chulanont, who is on a three-day visit to India beginning 25 June.

"For both governments, this means further strengthening our economic partnership, deepening our linkages, minimising barriers and maximising access for our products and capital."

"We in Thailand see in India a key engine of the rising Asian economy. We see in India a dynamic force for enhanced economic interaction with Asia and, indeed, globally," he said.

India and Thailand have a limited free trade pact agreed in 2003 and are negotiating a full treaty. Last year, trade touched $3.4 billion, more than double the levels in 2001, and Indian industry groups expect it to reach $7 billion by 2010.

Although some businessmen had expected the free trade agreement to be finalised during Chulanont''s visit, Indian officials said differences had caused a delay.

While Bangkok wants to liberalise trade in goods first, New Delhi wants to pursue free trade in goods, services and investments simultaneously, they said.

Nevertheless, both Chulanont and commerce minister Kamal Nath said officials were making good progress over concluding a pact soon. The Thai premier said a treaty allowing free trade in goods by 2010 was expected to be in place soon.

India''s trade with Thailand was less than 1 per cent of its total trade while Thailand ''s trade with China was about eight times higher, businessmen said.

An agreement will lead to lower tariffs and increase trade between the two from the current $2.2 billion.

Thailand has signed agreements with China , Japan and Australia and an accord with India will give the Southeast Asian nation access to the world''s second-fastest growing major economy.

Negotiations between Thailand and India that commenced in January 2004 have been hampered by India ''s demands to exclude almost 500 items from the tariff-reduction package, Thai commerce minister Krirk-Krai Jirapaet said on June 11. The exclusion will mean the draft accord will lower 70 per cent of the trade tariffs between the two nations, less than the 90 per cent WTO goal, he said.

The two nations are expected to complete negotiations this year, paving the way for signing of the free-trade agreement.

Tariffs on as much as 80 per cent of goods and services shipped between the two nations may be cut.

India offered similar tariff cuts to the Association of Southeast Asian Nations, with which it''s seeking a trade accord. The negotiations are deadlocked on agricultural products, which India wants to exclude from tariff cuts. Farm products are among Asean''s biggest exports to India.

India and Thailand have already cut duties on 82 products, including fruits, vegetables, wheat, diamonds and some metals, under a framework agreement that came into operation in September 2004. India and Thailand are aiming to abolish duties on goods traded between the two countries by 2010.