India-Thailand row over BIMSTEC rules of origin

Fri 3 Mar 2006 

Narinjara News

Two big economies in the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) - India and Thailand – are embroiled in a battle over the rules of origin on creating a free trade zone among the member states, sources said.

The sources said that a separate working group meeting on rules of origin is going to take place from March 10-12 in New Delhi to sort out the issues. It has become important to remove the hurdles in order to make progress in the overall deal making process, they said.

Official sources here, however, declined to accept it as a hurdle, saying there are many complex issues that need to be sorted out to move the process along.

The seven-nation forum was formed in 1997 with Bangladesh, Bhutan, Burma, India, Nepal, Thailand and Sri Lanka to link South Asia and Southeast Asia across the Bay of Bengal.

The sources said that the BIMSTEC free trade zone is scheduled to come into effect in July 1 this year and any slow-down in negotiations at this stage might derail the launch deadline.

A trade negotiating committee is conducting the overall trade negotiation for the BIMSTEC free trade zone. Many working groups on important issues like customs, arbitration, rules of origin and negative product lists are contributing to the work of the trade negotiating committee to seal the deal.

The sources said in view of the huge differences between the two major economies - India and Thailand - and the rules of origin issue, the trade negotiating committee has agreed this time to facilitate a separate meeting of the working group on the subject to sort out the nations’ interests.

The smaller economies like Bangladesh, Sri Lanka and Burma are just onlookers as the larger two remain locked over the issues. It will be an important factor in determining duty exemptions and tariff differentials on intra-regional trade under the emerging trade bloc.

The sources said the trade the negotiating committee would be meeting in early April to move the overall negotiation to its final goal. However, much of it will depend on the progress of the working group on the rules of origin, they said.