BIMSTEC meet to finalize FTA

BIMSTEC meet to finalize FTA
eKantipur.com, 26-Sep-2007

The seven member countries of BIMSTEC, including Nepal, have begun negotiations in Dhaka to finalize an agreement that would pave the way for establishing a free trade area (FTA) in the bloc.

The trade negotiation committee (TNC) assigned for finalizing the pact Wednesday discussed on agreements on trade in goods, which is one among the three subsidiary agreements to be agreed up for the establishment of the FTA.

Officials said that the TNC today mainly discussed on the negative lists and rules of origin - two areas in which differences have persisted for long.

During the meeting, Thailand proposed that the negative list, which includes items on which free trade rules would not apply, be brought down to 10 percent. Nepal and other members, citing sensitivity of agro and other products, proposed that it be kept at 20 percent.

So far, members have prepared a longer negative list including 25 percent of the total tariff lines. Nepal, Bangladesh, India, Thailand, Sri Lanka, Bhutan and Myanmar are the members of BIMSTEC.

During the discussions, Thailand opposed the intent of some of the member countries to include various items in negative list for some members and open those for others.

It proposed adoption of the principle of reciprocity in the agreement, whereby a product being in the negative list of a particular country would not get duty-free status in other countries in the bloc. The proposal was floated in order to apply pressure on the negotiating teams to reduce the negative lists.

On rules of origin, India stood firm on its proposal of 40 percent value addition for developing members and 30 percent for least developed members.

Thailand and other LDC members, including Nepal, on the other hand, pushed for 30 percent value addition criteria for non-LDC and 20 percent for LDC members.

Besides these two issues, which will determine the condition of trading under the FTA, BIMSTEC members are still to finalize items

to be opened under fast track and normal track of tariff liberalization.

Likewise, the TNC is also scheduled to discuss on items in which tariff would be brought down to zero and items in which tariffs would be slashed to 1 to 5 percent.

The members had agreed on a BIMSTEC framework agreement on FTA during the BIMSTEC Summit on February 8, 2004. Nepal had acceded to the bloc during the summit.

Although BIMSTEC committed to commence free trade on goods from July 2006, it missed the deadline due to the failure in finalizing the agreement. Likewise, the members are yet to start discussions on an agreement on trade in services and investments.