A few thoughts on SAFTA

By RATNAKAR ADHIKARI

That the eleventh Summit of the South Asian Association for Regional Cooperation (SAARC) directed the Council of Ministers to finalize the text of the Draft Treaty Framework of South Asian Free Trade Area (SAFTA) by the end of 2002, for the eventual signing by Ministers, did not come as a surprise to observers keenly watching economic developments in the South Asia region. Now that the Member countries and the SAARC are busy preparing the draft agreement, it is important to look into how they envisage to take this forward, with challenges galore.

The first challenge before the drafters is to ensure that the agreement is going to be compatible with the relevant provisions of the World Trade Organisation (WTO). It is pertinent to mention here that five Members of SAARC are already the Members of the WTO and two (Nepal and Bhutan) are in the process of accession. By the time SAFTA is signed, they will have probably secured their membership to the global trade body.

SAARC Preferential Trade Agreement (SAPTA), the precursor to SAFTA has already been notified to the WTO. However, it has been notified under what is technically known as the "Enabling Clause" which, inter alia, allows a group of developing countries to form a regional trade arrangement (RTA) among themselves without violating WTO provisions. A short answer to those skeptics, who argue that SAPTA may not be compliant with the relevant WTO provisions, is that SAPTA is very much WTO compliant.

It is just because of the paralysis in the present examination/decision making process of the Committee on Regional Trade Agreements (CRTA), that WTO has not given a ‘certificate of approval’ to SAPTA. It is not surprising because CRTA has so far only approved six agreements out of 156 RTAs notified to the WTO and groupings like the European Union (EU) and North American Free Trade Area (NAFTA) are not included in those fortunate six which have received a WTO stamp.

The second part of this article focuses on whether SAFTA is poised to become a building block or stumbling block to the multilateral trade liberalization. It is therefore necessary to see how these two theories have evolved. The theoretical foundations to these notions are provided by two schools of thoughts: namely, Summers (named after Larry Summers, former US Treasury Secretary and currently President of Harvard University) School and the Bhagwati (named after noted trade economist at Columbia University) School.

While as per the Summers School all the ‘laterals’ (uni-, bi-, pluri- and multi-) are good as long as they promote trade liberalization, the Bhagwati School argues that regionalism is a stumbling block to multilateral trade liberalization as it creates more trade diversion than trade creation. The later school drew on the 1950 work of Jacob Viner and it turns out that some practical evidences are in favour of this school. The former school too has some practical as well as theoretical arguments to back up its claims. The battle between regionalists and multilaterals does not show the sign to recede and it is likely to further intensify in days to come.

A third point this article is trying to make is about how SAFTA should proceed given the present scenario. Obviously, SAFTA’s goal should be to support the multilateral forum, as that is where the interests of the developing countries and least-developed countries (LDCs) are better protected. However, SAFTA might be a trade diverting than trade creating instrument if proper care is not taken while drafting the same. What therefore follows is a non-exhaustive list of the important factors that need to be taken into consideration during the drafting process.

First and foremost, the goal of SAFTA has to be to go all the way in terms of trade liberalization barring a very a few very sensitive sectors. Though SAFTA will still qualify to be notified under the Enabling Clause there is every possibility that it will have to be converted to what is called Article XXIV (the GATT Article, which deals with real RTAs) notification as happened with the Southern Common Market (MERCOSUR). One of the major requirements of Article XXIV is that the Members should liberalize "substantially all" trade among themselves. This effectively means that substantially all (which is yet to be defined but Australia has proposed more than 95% as the threshold requirement) tariff, para-tariff and non-tariff barriers should be removed among the Member countries.

Secondly, as is the general practice LDCs should be provided with a longer transition period to phase in trade liberalization, with an even longer transition period for the landlocked LDCs (LLDCs) so that they do not lose out disproportionately compared to relatively better off countries.

Thirdly, since relatively weaker countries in the region are dependent on tariff as their major source of revenue, some ‘transitional’ mechanism for compensation should be devised. Here, the emphasis on the word ‘transitional’ is important because an eternal compensation mechanism is neither sustainable nor desirable.

Fourthly, the dispute settlement process should not only be fair and transparent, but should also provide the option to the Members to either resort to the regional dispute settlement mechanism or to the WTO dispute settlement mechanism as in the case of NAFTA. This provision was included in NAFTA at the insistence of Canada and Mexico, which suspected that NAFTA mechanism could favour the largest country within the FTA. Due to asymmetry in the countries within South Asia and dominance of one large country, this approach can and should be replicated by SAFTA.

Having discussed so much about the modalities, a note of caution is worth sounding. Empirical evidence suggests that as opposed to North-North and North-South RTAs, South-South RTAs are the worst – they divert trade, place weaker nations at a comparative disadvantage and cause income divergence rather than convergence (as happened in the EU, when three poor countries joined the Union). However, the only major benefit of South-South RTA is of long-term nature and that comes mainly through increased size of the market. When the market size and resultant trade potential increases, it becomes attractive for the Northern free trade areas and customs unions to enter into an embrace the same, in the same manner as MERCOUSR currently. Both the EU and NAFTA are in an unusual hurry to bring MERCOSUR into their fold.

The road ahead for SAFTA is, therefore, to follow the Summers School and eventually contribute to multilateral trade liberalization. While SAFTA requires some sacrifice on the part of the weaker nations, nothing short of magnanimity is likely be enough on the part of stronger nations. Let us hope that it is forthcoming.

(The author is currently associated with the World Trade Institute, Bern)

Attaining nirvana

By HITESH KARKI

Little Siddhartha could not comprehend the very basics of life. He had not known what pain was, why the suffering and ultimately why death? His inquisitiveness got the better of him. And hence he resorted to meditation under a ‘bodhi’ tree where after a couple of years he would emerge as BUDDHA.

Fast forward to the present day world. Zoom in on the Himalayan kingdom of Nepal. The sufferings still prevalent just like the ones witnessed by Siddhartha in his kingdom of Tilaurakot ( not quite sure though!). While the government did not do much to ‘alleviate’ the endemic poverty, now they have own brothers and sisters hunting each other down mercilessly.

When it got WORSE, the Deuba cabinet decided that the world famous peacekeepers now needed to
render their services to their own nation rather than in far off Kosovo or Lebanon.

And now it seems one by one the cabinet members are attaining Nirvana. To begin with, just a day earlier HE, a key member of the cabinet, seemed so resolute and firm as far as his stand was concerned, saying ‘no question of dialogue unless they put their arms down’ and that the operation was in full swing. He showered the efforts of his ‘forces’ as well as the operations carried out by the armed forces with praises. He left no stone unturned to justify the current state of the nation. All that went on till the day HE was comfortably signing the transfer papers of all the political appointees in intelligence service directly into the ‘armed police force’. He saw everything going perfectly fine and the very moment a voice was raised against his decision he attained Nirvana!

Almost instantly he almost implied that he had been under an illusion that the forces were doing a good job! He didn’t hesitate to say that he was disappointed with the efforts of the joint forces of
the police and army. That’s one nirvana attained!

Another one always thought he wasn’t suited for the portfolio. He felt ashamed when his children teased him all the time referring to his portfolio but, poor he! , he had to be content with whatever was offered to him (which must be according to his net worth value amongst all the members of the cabinet ). So neither could he bargain nor could he quit. A perfect catch 22. Nor could he relinquish the once in a lifetime opportunity of becoming a minister of a country nor did he possess any ‘power’ so he could bargain for any other portfolio of his choice. He for a moment was a contented man. But as the numbering of the days of the Deuba cabinet began to gain momentum with GP coming with a ‘solution’ to the current crisis through an ‘even more(?) democratic’ form of government in the already established democratic set up, this man while conducting his daily routine, that of attending ceremonies, realized that it was not the portfolio which was bothering him but the size! He suddenly seemed to have realized that he was not on board a small beech-craft or an avro but a Boeing 777 , that too after flying high for almost half a year or so! On top of that all the passengers aboard suddenly resembled bad guys, smugglers, thugs, the corrupt !

While when little Siddartha could take no more of the events surrounding him and gave up his princehood to seek the answers behind the truths the two noble men even after attaining nirvana still …well I guess less said the best.

Just a modern day ’s modern ways of attainment of nirvana!

Snapping up Khajuraho

By JUG suraiya

Wow, look at this one here! Who’d have thunk it could be done like that? And how about this! How did she get into that position? Must be double-jointed or something. Probably something. And take a gander at the apparatus this guy’s got on him. Wonder he didn’t get bandy-legged lugging all that weight about. Hullo, what’s this? An entire group, would you believe? Talk about team spirit, talk about co-operative effort, talk about ...."

"How about not talking for a change and shutting up and listening to the guide instead," said Bunny cutting short my commentary. "And stop staring at the photographers," she added. "You’re meant to look at the sculptures, not at the people taking pictures of them."

Khajuraho, world famous for its temples adorned with friezes of erotic sculpture, was packed with tourists. Clambering on and around each other and their respective guides, they presented tableaux more convolutely intertwined than the orgy of stone carvings.

They — the tourists, that is, not the sculptures — belonged to all shapes, sizes, ages and nationalities. The Germans peered at the writhing stone with the studious prurience of latter-day Freuds. The Japanese seemed more obsessed with shutter speeds than with sexuality petrified for posterity. The Americans looked vaguely worried as if wondering if the people who’d posed for the statues had remembered to take safety precautions, like using plenty of dental floss between getting down to it again. The Brits exuded a wan regret, as though they’d just realised that they’d made a bad bargain and if given a second chance would swap the Kohinoor and the rest of the Crown Jewels for this lost empire of erotica on which the sin never set. The French appeared blase about the whole deal, as though to say: Merde, we order it better in la France.

I tore my gaze away from the rugger scrum of camera-clicking foreign tourists and turned my attention to the sensual stone of Kandariya Mahadeo, dedicated to Shiva and the largest temple in Khajuraho. Sharmaji, our local guide, philosopher and friend, resumed his interrupted spiel. "Please to note this is Kandariya Mahadeo, viz Shiva Temple, i.e. dedicated to Lord Shiva, 31 metres, viz 93 feet, in height and possessing 872 major sculptures, depicting gods and goddesses, sura-sundaris, i.e. beauteous damsels, one such shown here in most famous pose of removing thorn from foot, closely to observe suppleness of limb, and horses, processions, elephants, soldiers, and also no doubt as you will be knowing, mithun, viz erotic carvings ...."

But my attention had wandered once again and I was furtively peering at the shutter-sundari, viz Japanese photographer, shown in most famous pose of removing wide-angle lens and replacing with zoom, closely to observe suppleness of sculpted stone.

"Stop being an inverted voyeur and look at the statues Sharmaji’s showing us," said Bunny, winkling me out of the remote recesses of the 21st century into the blazing high noon of AD 950 when work began on the temples at Khajuraho at the behest of Chandravarman, founder of the Chandela dynasty. Though not an extensive realm, the kingdom of the Chandelas was rich in precious stones and other prized commodities, and attracted sculptors and artisans from far and wide to build in a hundred years of splendid creativity the 85 temples of which only 22 survive today.

"Here to be noting Assyrian-type beard on statue, and Gandhara posture, i.e. Greek influence, representing deviation from tribhanga formation, viz three-bended posture of traditional Indian style, all forming too beautiful harmonious composition," said Sharmaji. But I was noting instead Canon tripod attachment on American body, i.e. contortionist influence, representing deviation from upright formation, viz perpendicular posture of traditional homo sapiens style, all forming too dutiful spinal column dislocation.

"Here is frieze having multifarious positions from ancient Indian treatise on art of love-making, i.e. Kama Sutra," continued our guide, viz Sharmaji. But I was engrossed with the other frieze having multifarious positions from ancient international treatise on art of photo-making i.e. National Geographic. In terms of sheer acrobatic inventiveness, not to mention utilisation of the right focal lengths and appropriate apertures to maximise exposure effect, the frieze in stone wasn’t a patch on the one in photokinetic flesh.

"Here we are observing that temple is in four levels, representing four stages of existence, viz dharma, artha, kama and moksha, i.e. liberation," said Sharmaji. "Thus we may be seeing that purpose of erotic statues, i.e. love-making, is not for the sensual pleasures but to take leave of senses to achieve union with divine in accordance with tenets of Tantric philosophy," added Sharmaji with viz and vigour.

But I was seeing the shutter-sundari, i.e. Japanese photographer, take leave of the scene, having achieved union with divine liberation in accordance with tenets of tourist philosophy — viz finally running out of film. Moksha, courtesy Kodak.