India and Pakistan on Thursday agreed not to levy import duties of more than 5 percent on products traded within the South Asia Free Trade Area (Safta).
The decision was made at a meeting of South Asian commerce ministers, which concluded in Dhaka on Thursday. The meeting primarily discussed implementation of a free trade area in the region over next decade.
"They have agreed to remove import duties above 5 percent in three years to 2008 under the South Asia free trade area (Safta) agreement," Bangladesh''s commerce minister Altaf Hossain Choudhury told reporters.
"Immediate beneficiaries will be five other countries in the South Asian Association for Regional Co-operation (Saarc) and implement the reduced duty in four phases starting July this year," Choudhury said.
"The other five Saarc countries have also agreed to reduce their import duties by between 0 to five percent by next 10 years," he added.
The meeting was attended by commerce ministers of all Saarc nations, except Nepal.
The meeting decided to draw up a timetable to gradually ease tariffs to make Safta effective by 2016, officials at the meeting said.
Afghanistan will join Saarc next year.
"With 1.4 billion population in the Saarc region, one of the largest areas in the world, the intra-regional trade is very minimal," Lyonpo Chenkyab Dorji, the secretary general of the Saarc secretariat, told the opening session of the meeting on Thursday.
Intra-regional trade volume among Saarc countries stands at $6 billion, or about 4.4 percent of the total trade of member states worth $135 billion, officials said.
The SAFTA agreement signed at a summit in Islamabad in January 2004 came into effect in January this year. Tariff concessions under the agreement will be effective from July, 2006. A range of products that members deem sensitive will be excluded from the free trade deal.
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