Six in free trade zone, minus Dhaka

New Delhi, Feb. 8: India today agreed to create a free trade zone with five countries, brushing aside Bangladesh’s attempt to stall it.

It is likely to benefit more than two billion people by 2017 and will act as a bridge between South Asia and Southeast Asia.

The agreement was signed today in Thailand’s tourist resort Phuket, where the foreign and commerce ministers of Bangladesh, India, Myanmar, Sri Lanka and Thailand have gathered for a meeting on economic cooperation. The group, originally called Bimstec, will have to change its name as Nepal and Bhutan are now part of it.

The Indian delegation is being led by foreign minister Yashwant Sinha.

For Delhi, Bimstec is an important grouping and is part of its Look East policy. Last year, India had signed a free trade agreement with the Association of Southeast Asian Nations (Asean) and one separately with Thailand.

India, Myanmar, Sri Lanka, Thailand and the new entrants, Nepal and Bhutan, signed the pact. Bangladesh, which had earlier negotiated with others to sign the agreement, dithered.

It insisted on including a clause that would compensate Dhaka for the losses it is likely to suffer because of lower import duties on manufacturing. However, the others decided to go ahead with the pact.

Sources said Bangladesh’s tactics did not go down well with the other countries, particularly India, Sri Lanka and Thailand.

The fact that Bangladesh had called off negotiations on bilateral free trade agreements with India, Sri Lanka and Pakistan last month may have been another reason why the foreign ministers in Phuket did not want to wait any longer.

Bangladesh commerce minister Amir Khasru Mahmud Chowdhury tried to cancel his trip on Saturday, saying he was ill. But he changed his mind later.

“We’ll have six countries signing, with the exception of Bangladesh,” Thai foreign ministry spokesperson Sihasak Phuangketkeow told reporters.

All decisions taken at today’s meeting will be placed before the heads of government of the seven countries when they meet for the group’s summit in Thailand this July. There are also indications that by then, officials may succeed in resolving Bangladesh’s demand.

Under the original draft, the countries that signed the pact will start cutting import taxes in mid-2005.

India, Sri Lanka and Thailand — categorised in the pact as developing countries — plan to remove tariffs on each others’ goods and services by July 2012, five years ahead of Bangladesh, Myanmar, Nepal and Bhutan — grouped as least developed countries.

Apart from the free trade pact, the ministers also discussed cooperation in linking road networks and how to facilitate business and tourist travels.