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Thailand removes India's misgivings — Coast is clear for free trade pact

K. Venugopal

Bangkok , July 30

THE Indo-Thailand free trade agreement will go ahead as scheduled after all. If the Prime Minister, Dr Manmohan Singh, seemed on Thursday to harbour deep misgivings about the arrangement, his morning meeting here with the Thai Prime Minister, Mr Thaksin Shinawatra, seemed to have cleared all of them.

Announcing that negotiations were complete, the Commerce Minister, Mr Kamal Nath, told newspersons that the first phase of the agreement involving halving import duties on some 82 items would be implemented from September 1 this year.

The duty would be further halved the next year and reduced to zero from September 2006.

The list of 82 includes apples, mangoes, durum wheat, air-conditioners, household refrigerators, cordless telephones and electrical fans.

Import duties on these currently range from 10 per cent to 100 per cent in India and from 10 per cent to 60 per cent in Thailand.

The reduction in duties on the other goods would happen in phases thereafter and the comprehensive duty-free regime implemented by 2010.

One of the apprehensions India had was whether goods from a third country could use Thailand as a route to find easier access to India.

The fact that Thailand has free trade agreements with China and Australia weighed heavily on the Indian Government.

But the Prime Minister apparently won an assurance from Mr Shinawatra that this would not happen.

The agreement specifies that only those goods which have their value enhanced by at least 40 per cent in Thailand would be eligible for the lower import duty in India.

On India's part, the Prime Minister assured the Thai side that the agreement would be fully honoured by all the States in India.

The assurance had been sought after Thailand's bitter experience on this score in China, where its agreement was undermined by the Yunan province.

Open skies

Mr Shinawatra pressed for the implementation of the `Open Skies Policy' for flights between the two countries. He noted the substantial increase in the flow of tourists to Thailand as a result of the recent increase in the number of flights. More flights were required to sustain the growth. Dr Singh promised to examine the matter.

Reliance's loss, Indo Rama's gain

BUSINESS lobbies have apparently worked hard to change the fine print in the free trade agreement.

Initially, the number of items listed for the early harvest scheme that comes into effect from September 1 was 84.

But two items were pulled out from the list - polypropylene and polyethylene terephthalate, both of which are made by Reliance Industries in India - at the instance of Thailand.

Reliance's loss will be gain for Indo-Rama Synthetics, which makes them in Thailand.

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