The talks have become stuck on both sides over issues of tariff reductions for major trade in goods. As a result, India will focus more on bilateral trade talks with Thailand, said Chutima Bunyapraphasara, director-general of the Trade Negotiations Department.

"The member countries have a target that the July negotiations should make more progress, otherwise the pact will be scrapped," she said, adding that there is a strong possibility that negotiations will collapse as bilateral pacts are much easier to establish.

Asean countries are very keen to conclude an agreement with India. However, India has offered to decrease tariffs on only 60 per cent of the trade in goods between Asean and India, although the World Trade Organisation requires a decrease on more than 80 per cent on each side.

Trade negotiations between the Asean region and India started four years ago, but they have made little headway on details of the pact. The talks should begin again in July, and could become the final meeting between both sides.

Chutima said Thailand would also focus on a bilateral trade pact, rather than the regional agreement which has made little progress.

"The government does not want to lose our competitive edge to rivals. We will concentrate on the bilateral pact with India." she said.

India is awaiting the implementation of a bilateral trade agreement with Singapore and is negotiating with Malaysia.

Thailand and India will focus on increasing the number of items subject to tariff reductions on both sides to about 5,500, from the current 82 items under an "early-harvest" programme.

The two countries will expand their negotiations to cover trade in services and investment after trade in goods has been finalised.

To promote a closer relationship between India and Thailand, Commerce Minister Krirk-krai Jirapaet will next Tuesday to Friday lead a delegation of about 30 Thai enterprises to New Delhi to establish closer economic cooperation.

The visit will also be part of the celebration of the 60th anniversary of diplomatic relations between the two countries this year.

India is Thailand's largest export market in South Asia. Last year, two-way trade was valued at US$3.4 billion (Bt119 billion). Exports to India rose 17.9 per cent to $1.8 billion, while imports jumped 25.6 per cent to $1.6 billion.

Trade value on the 82 items was $465.4 million, with Thailand enjoying a $263-million trade surplus with India under the early-harvest scheme.

Meanwhile, the department will reconsider the form of the Free Trade Fund after the screening committee returned the plan for Commerce Ministry consideration.

Chutima said the department was in the process of adjusting the form of assistance to farmers and manufacturers adversely affected by free-trade agreements. The project should be finalised this year with a budget of about Bt100 million to help farmers and manufacturers affected by each free-trade pact.

Meanwhile, Thailand's military-installed premier yesterday urged business leaders to help persuade the Thai public of the benefits of a free-trade deal with Japan, which has been the target of street protests.

"The Japan-Thailand Economic Partnership Agreement's success and the benefits from it will depend on how all of you make use of it," Prime Minister Surayud Chulanont said in an address to Japanese business leaders in Tokyo.

"It is up to you to help us persuade the public in both countries that this is a win-win situation," he said.

Surayud spoke a day after signing the deal with Japan, the largest investor in Thailand. The pact scraps tariffs on 97 per cent of Japanese exports to Thailand and 92 per cent of Thai exports to Japan within 10 years.

The agreement was originally negotiated by the Kingdom's business-friendly elected prime minister Thaksin Shinawatra, whom the Army ousted in September.

The deal has triggered fresh street protests in Bangkok - led by activists who had campaigned against Thaksin - charging that Japanese companies would turn Thailand into a dumping ground for toxic waste.

Many foreign investors have also been wary about protectionist policies, including controversial currency controls, pursued by the government.

Surayud reassured Japanese business leaders that Thailand was stable and that he was committed to holding elections in December.

"This trip I hope will confirm to you once and for all that we are serious about such a commitment to promote business," Surayud said.

Japan has long-standing political and economic ties with Thailand. It was the first post-coup visit to a Group of Eight nation by Surayud, who has not travelled to any Western nations as premier.

Krirk-krai said Thailand was trying to "strike a balance" between liberalisation and regulations.

"We have no intention whatsoever to erect a barrier or to provide more restrictions," the minister told business leaders.

"Your legitimate concerns will be taken into account. That said, I would also like to ask you to honour and respect our right to regulate."

Petchanet Pratruangkrai

The Nation,

Agence France-Presse