Delay in 20 percent cut in sensitive list: India blocks Safta countries' negotiations

India has reportedly blocked negotiations among the South Asian Free Trade Area (Safta) countries over the much delayed reduction in sensitive list by 20 percent, sources told Business Recorder. "Deliberations are underway among the Safta countries to reduce the sensitive list by 20 percent for all countries. However, a meeting scheduled for October to discuss proposed reduction has been postponed indefinably," sources said.
According to sources, agreement on services among Safta countries was signed in Bhutan and further negotiations are being planned to finalise the schedule of concession under the agreement. Pakistan has already notified non-tariff barriers among Safta countries which are being examined by the concerned countries.
The South Asia Agreement on Trade in Services covers all four aspects ie cross border supply of services like telecommunication services, consumption of services medical facilities abroad, commercial presence in the form of opening bank branches and the most important movement of natural persons to be the part of the agreement.
Safta came into effect on 1 January 2006, with the aim of reducing tariffs for intra-regional trade among the seven Saarc members. Pakistan and India are to complete implementation by 2012, Sri Lanka by 2013, and Bangladesh, Bhutan, Maldives and Nepal by 2015.
Safta replaces the earlier South Asia Preferential Trade Agreement (Sapta) and may eventually lead to a full-fledged South Asia Economic Union. The negative list of South Asia Free Trade Agreement (Safta) comprises 53 percent of the total trade between the regional countries; therefore full implementation on the agreement would not even yield the desired results.
A couple of months ago, Indian High Commissioner during his visit to KCCI had stated that Pakistan does not keep in line with the provisions of Safta. According to him, India maintains a sensitive list of 850 tariff lines for all non-Least Developed Countries of Safta including Pakistan; "all other items are subject to Trade Liberalisation Program".
"Safta does not provide for a positive list approach for imports by one member country from another." Pakistan continued to follow a positive list approach vis-à-vis India and the list stood at a little less than 2,000 items, he added.
According to a Business Recorder report, Saarc member countries, for the first time, have moved for the free trade of 'services sector' in the region. The representatives from South Asian Association for Regional Co-operation (Saarc) member countries, including Pakistan, Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka, under the umbrella of Safta assembled in Sri Lanka on September 30, 2010 and discussed the possibilities of 'free trade of services'. The member countries had earlier agreed, in principle, to open their borders for free flow of services among the neighbouring countries of the region.