SAFTA trade tops US$ 2.4b mark

Secretary General of SAARC, Ahmed Salem said that trade under SAFTA has crossed the $ 2.4 billion mark.

He was speaking at the seventh SAFTA Ministerial Council meeting 2013 at the Cinnamon Grand recently.

"Our call to 'reduce the sensitive list by at least 20% before the 17th SAARC summit', must have contributed to trade growth in SAARC," he said.

The SAFTA Ministerial Council Meeting is the highest decision making body for the implementation and administration of the SAFTA.

It is estimated that the surging SAFTA market has a huge consumer headcount of 1.6 billion and is therefore 'highly promising'. Chief among the SA markets are India (world's second most populous nation, with 192 million estimated households), Pakistan (world's sixth most populous nation and second urbanised country in SA, with 28 million estimated households), and Bangladesh (world's eighth most populous nation with 34 million estimated households).

Sri Lanka was elected to chair the SAFTA Ministerial Council till August 2014 after which Bhutan will take over from Sri Lanka. Thus, by virtue of being the Minister of Industry and Commerce, Minister Bathiudeen becomes the new Chairperson of SAFTA till August 2014.

Minister of Economic Affairs of Bhutan, Lyonpo Norbu Wangchuk, Minister of Commerce of Bangladesh, Ghulam Muhammed Quader, Joint Secretary of Indian Department of Commerce, Arvind Mehta, High Commissioner of Maldives to Sri Lanka, Hussain Shihab, Secretary, Ministry of Commerce and Supplies of Nepal, Janardan Nepal, Secretary, Pakistan Commerce, Qasim M. Niaz, Secretary General - SAARC Secretariat, Kathmandu, Ahmed Saleem and officials of the countries were present.

The Sri Lankan team led by Minister Bathiudeen, consisted of Secretary, Ministry of Industry and Commerce, Anura Siriwardena, Director General of Commerce, P. D. Fernando and officials of the Ministry and Department of Commerce.

The Ministerial session was preceded by the SAFTA 'Committee of Experts' in-depth, face to face discussions.

Secretary General Salem said, "The 2011 SAARC summit held in the Maldives directed the SAFTA Ministerial Council to reduce members' sensitive lists, resolve non-tariff barriers, harmonise standards and modernise Customs standards. Trade under SAFTA has crossed $ the 2.4 billion mark. Our call to 'reduce the sensitive list by at least 20% before the 17th SAARC summit', must have contributed to trade growth in SAARC. Within South Asia, much larger volumes of trade are taking place outside SAFTA.

Regional trade

This is mainly due to the bilateral trade agreements among members. One of the reasons for slow phase of SAFTA is the sensitive lists."

"Several suggestions have been put forward to the Council to reduce hindrance to regional trade. To involve the private sector in the SAFTA process, representatives of SAARC Chamber of Commerce and Industry have been invited to the meeting of Committee of Experts on non-tariff and para-tariff measures to present their views and concerns," he said.

"However SAARC is still often criticised 'that much more can be done'. SAFTA regional trade is still low compared to ASEAN and NAFTA. One of the reasons is that the number of items in region's sensitive lists of member states is still high, such as agriculture commodities. I am happy to note that phase II to reduce the sensitive list and to liberalise trade have been undertaken by member states and two meetings in this regard have already been held," Salem said.

"Many pragmatic businessmen will agree with me that it is not the size or length of the negative lists that counts, but whether the products indicated therein are actually 'exportable' without the obstruction of NTBs," said Minister Rishad Bathiudeen. "Measures to dismantle all barriers to trade under the South Asian Free Trade Area (SAFTA) Agreement are under way."

"A meeting on Non-tariff Measures (NTMs) and Para-tariff Measures (PTMs) was convened at the SAARC Secretariat in Kathmandu last month. In keeping with the directive of SAARC Leaders to involve the private sector in decision making, representatives of the SAARC Chamber of Commerce and Industry (SCCI) were present at the meeting," he said.

"The Committee of Experts follow the objectives and concerns of the SAARC Leaders with regard to impediments to liberalised trade from non-tariff and para-tariff barriers," Bathiudeen said.

"Today, we stand at the threshold of a great number of alternate strategies adopted in global trade among countries to increase exports and draw FDI. The slowing down of the global economy, the dormancy of the Doha Round of Multilateral Trade Negotiations have propelled nations to increasing levels of regional and bilateral free trade agreements and to engage in comprehensive economic partnership arrangements," he said.

"The emergence of successful Northern Trade Blocks as NAFTA (North Atlantic Free Trade Arrangement) and EU (European Union) have resulted in marginalisation of the developing countries in global trade. Sri Lanka remains fully committed, confidant and supportive of the objectives of SAFTA in further enhancing the program of regional economic integration through the promotion of preferential trade, the Minister said.

"Members will recall that Sri Lanka was closely involved in the pioneering regional economic integration which began with the setting up of the South Asian Preferential Trading Arrangement (SAPTA) in 1995," he said.

"SAFTA is not merely South Asia's response to the undeniable trend of regionalism.

Cooperative framework

SAFTA is fundamentally important because it gives a cooperative framework to South Asian economic integration. This has undoubted benefits for the region by way of economic gains in the form of efficient use of capital, labour, FDI and distribution of goods and services across borders," Bathiudeen said.

"There could be strategic gains as SAFTA Members negotiate multilateral concessions in global fora as a unified group with a common interest. Developmental and environmental efficiency gains will arise when SAFTA members adopt a regionally integrated approach on provision of public goods.

"If we look at actual performance, intra-regional trade growth among SAARC countries has no doubt been rather modest. However, the level of dependence on intra-regional trade among these countries varies and informal intra-regional trade growth is also worthy of consideration," he said.

"We believe that together we can as a region address limiting factors that affect SAFTA in a cooperative spirit for mutual gain.

"We are encouraged by the positive developments in the run up to the Seventh Council Meeting of the Ministers. Commendable progress can be observed from the deliberations of the fifth and sixth SAFTA Ministerial Council Meetings held in the Maldives in 2011 and in Islamabad in 2012.

Some of these progressive developments deserve brief mention so as to take stock of where we stand today with the SAFTA process while exploring further advances we can make at the seventh session," the Minister said.

"It is perhaps our common experience that trade agreements that are concluded without adequate binding commitments to address issues of Non-Tariff Barriers are doomed. We have secured a definite plus with the SAFTA and its stand on NTBs. SAFTA has an important consultation and dispute settlement mechanism in its framework," he said.

"This is unparalleled in previous FTA's concluded by countries and the lack of such mechanism had marred its success.

"A fresh round of negotiations for further reduction of the number of products in the Sensitive Lists under SAFTA has proceeded beyond the minimum requirement of 20%," Bathiudeen said.

"Some members have proposed reductions above the stipulated requirement.

"The ceiling placed on the Sensitive List of SAFTA is therefore an important development. The Trade Liberalising Program (TLP) under SAFTA is progressing satisfactorily with widened scope including the tariff reduction offers of Afghanistan," he said.

"The progress achieved since the fifth meeting of the Expert Group on SAARC Agreement on Trade in Services (SATIS) has added an important and crucial dimension to the future direction and ambit of the SAFTA process which has become a more comprehensive tool of liberalisation, the Minister said.

"I am confident that the new aspect of SAFTA relating to trade in services would foster a friendly climate for cross border investments.

"In making such concessions, we should strive to accommodate domestic policy concerns, asymmetries and imperatives," Bathiudeen said.

"SAFTA stands poised to actively contribute and encompass the process of political and economic integration and vision of an Asian Economic Community," he said.