Prime Minister Syed Yousuf Raza Gilani has said that Safta has the potential to establish a regional bloc with collective goals, and diversified abilities and potential as well as accelerate trade among the member countries. The prime minister was addressing the Saarc Commerce Ministers on Thursday said that he was pleased to extend all of the distinguished delegates from the Saarc countries a very warm welcome.
It is indeed a great pleasure for Pakistan to have the opportunity of hosting the 6th Safta Ministerial Council and its earlier meetings. We are all aware that the signing of the Agreement on South Asian Free Trade Area in January 2006 was a momentous event in the history of Saarc. We have undertaken an initiative, which, I believe, can open up a huge opportunity for achieving much greater economic integration among countries of the region. Regional economic integration, in my view, is the most viable mechanism in the contemporary world.
In this context, I would like to mention that in today's world every country is struggling to transform the emerging challenges of globalisation into opportunities for fostering development and economic prosperity. Regional trading arrangements are seen as an effective regime to encounter the global challenges through greater economic co-operation and engagement. The emergence of regional groupings across the world in recent times clearly demonstrates the need for forging deeper integration in our region.
It is now widely recognised that regional trade agreements can complement the broader objectives of multilateral trade liberalisation processes. A vast majority of existing regional agreements are established among geographical neighbours, as in the case of Safta. This is because such proximity provides inherent advantages in terms of greater and faster integration. Safta has also provided us with an enabling institutional framework to increase the existing low levels of intra-Saarc trade - around 5% in comparison to the trade share of the regional trade of the European Union at 67 percent, the North American Free Trade Agreement (Nafta) at 62 percent and the Association of Southeast Asian Nations (Asean) at 26 percent.
The potential benefits of a successful free trade agreement are multiple, and will not be restricted to increased trade alone. In fact it is not an exaggeration that the achievement of the core objectives of Saarc itself - economic growth, social progress and cultural development including the promotion of the welfare of the people of South Asia, will depend, to a great extent, on the economic and other benefits that will result from implementation of Safta. It is, therefore, imperative that we build on the momentum by implementing decisions taken by bodies formed under Safta. The establishment of South Asian Free Trade Area depends critically on the ongoing negotiations. There are several vital issues that are to be successfully negotiated within the specified timeframe.
As per Trade Liberalisation Programme under Safta, the Non-LDCs (Sri Lanka, India and Pakistan) would reduce their tariff to 0.5 percent by 2013, whereas the LDCs would reduce tariff to 0.5 percent by 2016. The Safta tariff Liberalisation Programme also allows the member states to retain "Sensitive Lists" that are not offered for concessional treatment. We know that India has two separate Sensitive Lists one for NLDCs and other for LDCs. Since India, Pakistan and Sri Lanka are NLDCs in the region, this makes Indian Sensitive List Pakistan-specific. The Indian Sensitive List for NLDCs has 861 but for LDCs it has only 25 items.
We are also cognisant of the fact that the WTO trading arrangement is based on the principle of MFN, which implies non-discriminatory treatment among the member countries in terms of tariff as well as the number of tariff lines traded between the countries. Pakistan being the signatory to WTO is obliged to observe this principle.
I recognise that the outstanding issues of negotiation are quite complicated and it is not easy to find a common ground for all negotiating parties. Despite such difficulties, we have got to work hard and work in a spirit of goodwill and accommodation, keeping in mind the time limit and the urgency of deepening economic integration in our region. I have full confidence in you and firmly believe that you would be able to conclude the negotiations successfully.-PR