Coup casts cloud over Indo-Thai free trade talks

NEW DELHI: The military coup in Thailand has hit the proposed Indo-Thai free trade agreement (FTA). While both the countries were hoping that the suspended talks would restart after the scheduled Thai elections in mid-October, the recent military takeover of Bangkok has ensured that the FTA will remain a dream for a long time.

While the early harvest programme has been set rolling, the trade pact is unlikely to make any progress till the political situation in Thailand returns to normal. This is despite the fact that India has taken a cautious stand and avoided criticism of the military takeover.

Speaking to ET, government officials said that the Indian embassy in Thailand had informally confirmed that there were no chances to restart the trade negotiations before the political atmosphere gained some stability in the country. “Nobody knows when things will return to normal in Thailand.

There is no use working on the FTA now,” an official said.
While Indian tourist inflows into Thailand is unlikely to be affected in a bid way, it is felt that the proposed FTA is a different cup of tea. Trade between the two countries is also expected to remain normal since it is run by private businesses.

Problems were creeping into the India-Thailand FTA talks even before the political problem started in Thailand. Even as various segments of the Indian industry including auto component sector were apprehensive of cheaper imports, Bangkok had expressed its unhappiness with India’s negative list of items which was later pruned down to 1,000. The negative list includes items which are to be excluded from FTA.

Thailand is interested in a number of items which India wants to keep out of FTA. These include chemicals, textiles, iron and steel and automobile components. Last month a visiting Thai commerce ministry official had pointed
out that India had kept major items of their interest in the negative list. The official had said that Thailand will try to persuade India to offer these sectors in the concessional tariff segment.

Thailand also wants India to give up the stringent rules of origin (ROO) norms being followed under EHP in favour of a less strict ROO that India had agreed to keep in the FTA with Asean.

ROO lays down the rules for determining which product originates from the partner country and should qualify for benefits under the FTA. If ROO norms are loose, an FTA partner country can make superficial changes to imports made from third countries, and then export it into its other partner’s market on preferential terms.