Regional Tangle
The regional free trade pact is not moving ahead as expected
By SANJAYA DHAKAL
Even as the Doha round of the World Trade Organization (WTO) has become stalled for the last many months, another regional trading arrangement of equal importance to Nepal – the South Asian Free Trade Area (SAFTA) – too, has not shown encouraging signs.
As the seven member states of SAFTA – Nepal, India, Pakistan, Bhutan, Bangladesh, Maldives and Sri Lanka (Afghanistan is poised to join it soon) – have been unable to resolve important issues like finalization of negative list, dispute settlement mechanism, ways to deal with Non-Tariff Barriers (NTBs) and Para-Tariff Barriers (PTBs), and so on, the crucial second SAFTA Ministerial Council (SMC) held in Kathmandu on February 26 ended inconclusively.
Ahead of the SMC meet, a two-day meeting of the Committee of Experts (CoE) –a comer joint secretary level panel – too, had failed to bridge differences over these issues and had forwarded the pending issues to the SMC.
However, the SMC could not reach the desired understanding even though commerce ministers and senior officials of the regional member states were locked in hours of discussions.
Following the meeting, the commerce ministers of India and Pakistan traded accusations over the virtual deadlock.
According to Indian Commerce Minister Kamal Nath, Pakistan had resorted to selective implementation of the multilateral trade agreement in the case of India , violating the very essence of SAFTA.
On the other hand, Pakistani Commerce Minister Humayun Akhtar Khan said that the two countries will now talk bilaterally over the contentious issues to ensure the effective implementation of SAFTA.
The SAFTA has not been able to move forward as desired since the countries have not been willing to considerably reduce the tariff lines. Even if they have reduced it for certain items, the reductions have been nullified by the introduction of NTBs and PTBs like quantitative restriction, quarantine specifications and so on.
Since the SAFTA – which envisages a duty free trading zone in next one decade in this region – has not moved forward, the talks by the political leadership of the region about floating SAARC Economic Union appears nothing more than a chimera, at least for the time being, to the sadness of one-sixth of human beings who call this region their home.
PAKISTAN PUSHES FOR FTA
Addressing a press meet on the sidelines of the SMC meeting in Kathmandu, the Pakistani commerce minister Humayun Akhtar Khan said his government intends to sign a Free Trade Agreement (FTA) with Nepal soon.
Khan informed that processes have already been initiated to negotiate such FTA. The minister said that Pakistan is ready to offer virtually whatever access Nepal wants. “Whatever access Nepal wants, we are ready to give it,” he said.
Pakistan has already provided a duty free access to Nepalese tea following which the volume of its exports to Pakistan grew substantially. Khan added that as per the request of Nepalese business community, the Pakistan International Airlines (PIA) has already reduced the cargo shipment charge from $1.13 to 72 cents per kilo.
Pakistan has already signed FTA with Sri Lanka and is now working to sign it with Nepal and Bangladesh . The volume of trade between Nepal and Pakistan stood at US$ 8 million last fiscal year.
INDIA WANTS TO SIGN CEPA
India 's Commerce Minister Kamal Nath has said the Indian government wants to sign a Comprehensive Economic Partnership Agreement (CEPA) with Nepal . The CEPA is an umbrella pact covering all aspects of business, investment, trade, tourism and so on.
Speaking at a press meet on the sidelines of the SMC, he expressed India ’s willingness to extend all possible help to increase Nepal ’s exports to India . He informed that the Indian government was considering waiving four percent additional duty levied on Nepalese readymade garment to India .
He also informed that trade treaty between the two countries will be renewed automatically.
