The Bangkok Agreement is an initiative under the Economic and Social Commission for Asia and the Pacific (ESCAP) for trade expansion through exchange of tariff concessions among developing country members of the ESCAP region. This agreement was signed on 31 st of July 1975. Seven countries namely, Bangladesh, India, Lao PDR, Republic of Korea, Sri Lanka, the Philippines and Thailand met at Bangkok and agreed to a list of products for mutual tariff reduction. However, this agreement was not ratified by Thailand and the Philippines due to their ASEAN commitments, which was also coming into force at that time. Lao PDR is not an effective participating member since it has not issued Customs Notification on the tariff concessions granted to other participating States. Papua New Guinea acceded to the Agreement in December 1993, but has not yet ratified it. Thus, this agreement remained operational between four countries namely, Bangladesh, India, Republic of Korea and Sri Lanka.
The developing countries and associate members of ESCAP are eligible to accede to the Agreement. The applicant country may accede to the Agreement if at least two-thirds of participating states recommend its accession. China’s accession to the Agreement was approved by consensus by the member countries at the Sixteenth Session of the Standing Committee of the Bangkok Agreement in April 2000 and subsequently China deposited the Instrument of accession to the Bangkok Agreement with the ESCAP Secretariat. With China’s accession, the Agreement has acquired a altogether new importance, and provides an ideal platform for India and China to engage with each other for a meaningful exchange of tariff concessions.
Three rounds of trade negotiations have been held. The First Round was in 1975 when the agreement was signed and the Second Round commenced in 1988 and was completed in 1990. Upto the Second Round, India’s general concessions on 106 items correspond to 188 tariff lines (six-digit HS). The 12 items on which special concessions have been provided to Bangladesh correspond to 33 tariff lines. On China’s accession to Bangkok Agreement, India has extended the concessions which it has already extended to other developing member countries of Bangkok Agreement, China has granted concessions on 217 items (ITC HS Code 8digit) to India in addition to the concessions already granted to other member countries of the Agreement. These concessions have been made effective from 1 st January, 2004.
The Third Round of Negotiations under the Bangkok Agreement was launched in October, 2001, and concluded recently on the basis of the mandate received from the Cabinet in its meeting dated 6 th November, 2003 vide Case No.282/31/2003. The exchange of concessions during the Third Round of Negotiations can be summarized in the following manner:
(i) No concessions were exchanged with Sri Lanka as India has already entered into a bilateral Free Trade Agreement with Sri Lanka.
(ii) As Bangladesh is the only Least Developed Country (LDC) member in the Bangkok Agreement, we agreed to extend unilateral tariff preferences to Bangladesh on 25 items based on the principle of non-reciprocity.
(iii) We gave concessions to China on 311 items (6-digit HS) and received concessions from China on 589 items (8-digit HS).
(iv) We gave concessions to Republic of Korea on 88 items (6-digit HS) and received concessions from Republic of Korea on 138 items (8-digit HS).
Since the Bangkok Agreement was signed in 1975, it was felt that the text of the Agreement needed amendments, taking into account the economic developments that have taken place since then. The text was revisited and was slightly modified. It now has a Ministerial Council as the apex body which would decide policy issues relating to the Agreement. The text is required to be signed by the Ministers in their first meeting which is scheduled to be held this year. However, prior to this meeting, Rules of Origin are required to be finalised for which purpose a meeting of the Standing committee of the Agreement will be convened by the ESCAP Secretariat. At this meeting, the dates for notifying concessions agreed during the Third Round of Negotiations would also be finalised.