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Tough days still ahead for SAFTA
KATHMANDU, JAN 08 - The endorsement of SAFTA framework agreement and all the seven member states agreeing to ratify it in 2006 has finally come as something, which the seven member groups can show tangibly where they tend to move ahead in future.
However, what is important to note is that it became possible only by overstepping a number of businesses that were left unfinished. The member countries have committed to settle these issues within the next few years prior to implementation of trade liberalisation measures. But, considering the sensitiveness of the outstanding issues, giving a final shape to the SAFTA agreement within the stipulated time, would be a tough task.
Here are few reasons why the days would be tougher ahead for SAFTA process. With the member-countries agreeing in opening their market for most of the products for regional players, there are a few measures left that works as a safeguard to individual economic interest.
Development of sensitive lists, rules of origin and revenue compensation process, are some of the outstanding measures that each country would like to shape strongly in their favour, particularly the least developed members. Moreover, these were the issues in which the negotiating members failed to converge all the way since the commencement of SAFTA negotiation over last two years.
The SAFTA framework agreement has provisioned that the trade liberalisation programme, under which the member countries need to slash down the tariff barriers to 0 to 5 per cent, would not be applicable to sensitive lists. Also, the agreement mentions that the LDCs can have longer list of sensitive items, particularly in respect of the products of their export interest.
Hence, the curtailing the number of the products in sensitive lists would be the foremost focus of the developing countries. This is where the LDCs and developing countries are bound to collide head-on.
Also, the issue of rules of origin in which the LDCs are demanding favourable conditions for their products in regional free trade area is expected to polarise the member states once again.
In a special and differential treatment for the LDCs, the developing countries have agreed to establish revenue compensatory mechanism for the loss of customs revenue prior to the commencement of the trade liberalisation programme. However, its rules and regulations are yet to be worked out. This is viewed to pose more intense problem, considering the depth required handling the matter.
Easier said than done would be the adoption of trade facilitation and other measures, as these involves issues that have long been lingering even at bilateral level.
This include, among others, harmonisation of standard, reciprocal recognition of laboratory certification, simplification and harmonisation of customs clearance, transit facilities for efficient intra-SAARC trade, especially for the land-locked members, removal of barriers to intra-regional investment and development of communication systems and transport infrastructure.
While without these trade facilitation measures SAFTA would not be able to function better than SAPTA, there still lack mutual trust among member-states to believe each other, particularly on matter related to harmonisation of customs and certification, and providing transit facilities to member states.
Hence, accelerating the SAFTA process depends on political commitment and financial interest of each of the member-states. And, given the ‘gloomy’ track record, the most challenging thing in the regional trade integration process would be to maintain maintaining the tempo of current generosity exhibited by member-states, particularly by India and Pakistan.
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