Kathmandu meet on SAFTA sensitive lists fails to deliver
Nazmul Ahsan | Tuesday, 5 April 2011
Nazmul Ahsan
The SAFTA member countries have tacitly expressed their reluctance to cut the number of products in their respective sensitive list (SL) under the regional trade pact, making the prospect of the five-year-old trade bloc bleak. The official representatives of eight member countries of the South Asian Free Trade Area (SAFTA) agreement met in Kathmandu, Nepal from March 28 to March 31 to exchange their shortened SLs, as decided about one year back. But they refrained from acting in accordance with the schedule, sources said. Instead, most of the member countries preferred to grant duty-free market access of products on the basis of bilateral arrangements.The countries were supposed to reduce the number of items on their respective SLs by 20 per cent at the just-concluded second meeting of the Working Group on Reduction of SAFTA SLs. "Most of the member countries expressed reluctance to exchange their finalised SLs at the meeting, citing various reasons, like trade diversion and revenue loss," a top government official, who attended the meeting, told the FE Monday. "I see the prospect of establishing a free trade area among the SAFTA member countries bleak, as the member countries preferred bilateral approach to that of a regional one," he added. Bangladesh, too, took the decision similar to other member countries at the meeting, though it had trimmed its SL. The SAFTA agreement came into effect from July 2006. However, the total volume of trade under the regional pact is insignificant, as the major tradable products are still there on the SLs of the member countries. The products, included in the SLs, are not subject to any duty benefit. Presently, the SL of Bangladesh comprises of 1,233 items for the least developed countries (LDCs) and 1,241 for the non-LDC countries, the SL of Afghanistan includes 1,072 items, and that of Bhutan 150. The SL of India comprises of 480 items for the LDCs and 868 for the non-LDCs, the SL of the Maldives includes 681 products, that of Nepal has 1,257 items for the LDCs and 1,295 for the non-LDCs. Besides, the SL of Pakistan includes 1,169 items, and that of Sri Lanka 1,042 products. "The duty-free regime, to be established among the member countries of SAFTA by 2016, as per the road-map of the agreement, seems absurd. It is not possible unless the countries are ready to sacrifice the income from customs duty, and prepare their respective domestic industries for open market competition," a high official in the Ministry of Commerce said. He said almost all the major tradable commodities are still included in the SLs of eight member countries. The current backlog might be addressed in the upcoming SAFTA ministerial meeting, to be held next month in the Maldives. "We have no tangible progress since the SAFTA started its journey in July 2006. Only political commitment of the policymakers could change the mindset of the South Asian nations, and reduce the prevailing difference." "Member countries like India and Pakistan have to come forward first, prioritising trade over their political issues," he added.
The SAFTA member countries have tacitly expressed their reluctance to cut the number of products in their respective sensitive list (SL) under the regional trade pact, making the prospect of the five-year-old trade bloc bleak. The official representatives of eight member countries of the South Asian Free Trade Area (SAFTA) agreement met in Kathmandu, Nepal from March 28 to March 31 to exchange their shortened SLs, as decided about one year back. But they refrained from acting in accordance with the schedule, sources said. Instead, most of the member countries preferred to grant duty-free market access of products on the basis of bilateral arrangements.The countries were supposed to reduce the number of items on their respective SLs by 20 per cent at the just-concluded second meeting of the Working Group on Reduction of SAFTA SLs. "Most of the member countries expressed reluctance to exchange their finalised SLs at the meeting, citing various reasons, like trade diversion and revenue loss," a top government official, who attended the meeting, told the FE Monday. "I see the prospect of establishing a free trade area among the SAFTA member countries bleak, as the member countries preferred bilateral approach to that of a regional one," he added. Bangladesh, too, took the decision similar to other member countries at the meeting, though it had trimmed its SL. The SAFTA agreement came into effect from July 2006. However, the total volume of trade under the regional pact is insignificant, as the major tradable products are still there on the SLs of the member countries. The products, included in the SLs, are not subject to any duty benefit. Presently, the SL of Bangladesh comprises of 1,233 items for the least developed countries (LDCs) and 1,241 for the non-LDC countries, the SL of Afghanistan includes 1,072 items, and that of Bhutan 150. The SL of India comprises of 480 items for the LDCs and 868 for the non-LDCs, the SL of the Maldives includes 681 products, that of Nepal has 1,257 items for the LDCs and 1,295 for the non-LDCs. Besides, the SL of Pakistan includes 1,169 items, and that of Sri Lanka 1,042 products. "The duty-free regime, to be established among the member countries of SAFTA by 2016, as per the road-map of the agreement, seems absurd. It is not possible unless the countries are ready to sacrifice the income from customs duty, and prepare their respective domestic industries for open market competition," a high official in the Ministry of Commerce said. He said almost all the major tradable commodities are still included in the SLs of eight member countries. The current backlog might be addressed in the upcoming SAFTA ministerial meeting, to be held next month in the Maldives. "We have no tangible progress since the SAFTA started its journey in July 2006. Only political commitment of the policymakers could change the mindset of the South Asian nations, and reduce the prevailing difference." "Member countries like India and Pakistan have to come forward first, prioritising trade over their political issues," he added.