Sluggish approach towards implementing the decisions taken by Heads of State of Saarc region is impeding progress and growth of the South Asian Free Trade Area (Safta). This was stated by Annisul Huq, President of Saarc Chamber of Commerce and Industry (Saarc-CCI) in his keynote address at the 'Round Table on Safta: A Precursor to 16th Saarc Summit', on Wednesday at Kathmandu, according to a message received here.
The conference is focusing on operationalsing Safta issues and options and making it a workable mechanism. South Asian region with 23 percent population and enormous potential could win the world but it was unfortunate that nations could not win even each other, he said.
He emphasised that if the governments of South Asian nations have the desire to achieve the objectives of Safta, they will have to adopt a workable mechanism and have to make binding commitments to reduce their negative lists, eliminate, or at least substantially reduce, Non-Tariff Barriers (NTBs), and shorten the period of implementation of tariff liberalisation.
Dr Sheel Kant Sharma, Saarc Secretary-General, in his inaugural speech said that core proposals on various issues would be placed before the Heads of State at the 16th Saarc Summit, to be held in Bhutan, and expressed hope that decisions taken at the summit would help improve the present level on intra-regional trade, which was only $670 million under Saarc rules of origin.
Tariq Sayeed, immediate past president of Saarc-CCI demanded greater political will to achieve the targets envisaged under Safta. Barriers need to be removed which are impeding the growth of regional trade, he said, adding that South Asian nations could trade among them only worth $11 million in 2008 against the revealed potential of $42 billion. The countries thus failed to tap 72 percent potential available in regional trade, he added.
Kush Kumar Joshi, President of the Federation of Nepal Chamber of Commerce and Industry, urged for undertaking appropriate and speedy measures to reap maximum benefits from Safta.
Vikram Jeet Singh, Senior Vice-President of Saarc-CCI, said that signing of Safta had given a ray of hope for liberalisation of trade in the region. However, he said, the intra-Saarc trade was insignificantly low, at 5 percent, as compared with other leading trade blocs like EU 55 percent, Nafta 52 percent and Asean one percent. He expressed hope that, with Safta coming into picture, the current level of trade would be doubled within three years.
Dr Zaffar Mueen Nasir, Chief Researcher, Pakistan Institute of Development Economics (Pide), talking on 'Liberalisation and counter-terrorism: Trade of choices', said that liberalisation helps in growth of trade and reduction of poverty.
Dr Selim Raihan of the Department of Economics, Dhaka University, presenting his paper on 'Impact of barriers on intra-Saarc trade', said that trade and welfare effects of regional trade arrangements (RTAs) are ambiguous. Preferential trading arrangements are not always trade creating or welfare enhancing on the whole. Distribution of gains among members is unlikely to be equal, he said.
Mujeeb Khan, Head of Research and Trade Development Authority of Pakistan (TDAP), speaking on 'Pakistan & Safta: Issues, Constraints and Remedies', gave statistical pictures of trade among Saarc countries, based on State Bank of Pakistan, Federal Bureau of Statistics and International Trade Center data. "These data suggest that we should come out of the positive regime approach trading and open up trade with India and grant most favoured nation status to it, which in no way would injure our manufacturing base".
Engr M A Jabbar, life member Saarc and member working group of Asian Development Bank-Federation of Indian Chambers of Commerce and Industry (ADB-FICCI), basing his presentation on ADB-FICCI report on 'Harnessing business opportunities: Study of private sector-led integration in South Asia', highlighted that private sector has played a pivotal role in the process of transformation. South Asia's export growth increased five-fold, from 4.3 percent to 20.1 percent, between 1990 and 2008. The region also witnessed an average annual GDP growth rate of 5.9 percent from 1980-2008. South Asia has also begun a process of regional co-operation and integration, and South Asia offers a potential market of 1.5 billion people and measures region's prosperity.
Nevertheless, he said, levels of intra-regional trade remained modest, at 4.8 percent in 2008, compared with other regions. He said that residual issues relating to business travel, transit infrastructure, NTBs and intra-regional investment, remain impediments to private sector-led development in South Asia.
On expanding the Saarc visa exemption scheme, he said that entitled persons' list does not include business travellers and other professional groups. Quota on visa stickers leads to delays; period of validity and scope of travel permitted is too narrow; and political restrictions impede the scheme. He suggested to move from a sticker scheme to an electronic "business travel card" and install electronic readers at airports.
On a Saarc regional motor vehicular agreement, Jabbar suggested establishment of special stations, or "fast lanes", designated for goods transport vehicles, harmonisation of transit vehicle standards and creation of "vehicle transit cards," besides offer low-cost financing options to help business upgrade truck fleets, and establish joint trucking ventures between countries. Dealing with Non-Tariff Barriers (NTBs), he said that measuring the NTBs could be difficult, and regulatory measures are often inconsistent and mutually recognised among Saarc members.
Therefore, marshal consensus on classifying NTBs for better regulatory co-operation and creation of NTB notification systems and building online inventories for better monitoring was desired. It was also necessary to strengthen human and institutional capacities for collection and analysis of data on NTBs, provide technical assistance to firms to help meet technical standards, and establish a dispute settlement mechanism.
Engr Jabbar said that there was need to improve land customs stations by expanding the size of customs stations, including parking and warehouses and provision for basic amenities. Establishment of multi-agency testing laboratories (international standard) at major custom stations, where feasible, or authorise nearby laboratories to conduct testing was also required.
In order to promote intra-regional investment, investor protection needs strengthening as bilateral investment treaties (BITs) are under-utilised, he said.
Following steps were suggested by him for achieving the objective:
-- Open excluded sectors on a limited basis, ie allow foreign direct investment (FDI) for those sectors in specific cities.
-- Expand the use of bilateral investment treaties (BITs) and harmonise with investment provisions in free trade agreements (FTAs).
-- Boards of Investment (BOIs) at the country level should promote more intra-regional investment; establish dedicated country offices.
-- Expand marketing strategies and target priority sectors.
-- Conduct a feasibility study on creating an umbrella investment body for South Asia.
Ms Suwendrani Jayaratne, Research Assistance, IPS, Sri Lanka, in her presentation discussed trade facilitation issues in South Asia and tried to sum up to conclude that with the progress in enhancing values of trade facilitation, Sri Lanka witnesses positive results. Pressure on exporters to increase productivity and reduce costs, reduce average transaction time is broadly improving the processes associated with trading across national borders.
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