National 3 (Spotlight Weekly)

Trade Tasks

The Committee on Economic Cooperation decides to go ahead with SAPTA and SAFTA

By SANJAYA DHAKAL

By any standard, the progress of the South Asian Association for Regional Cooperation (SAARC) as a regional body has been slow. With two of its seven member countries failing to see eye to eye, issues like regional cooperation and economic union have taken the back seat.

Thankfully, the 11th SAARC Committee on Economic Cooperation (CEC) held this week (October 26-27) after a long gap made some positive decisions on economic and trade issues. But the going was not easy, with officials from the member states differing in many items till the eleventh hour. The meeting of the commerce secretaries of all the seven member states had to be protracted several hours beyond the stipulated time on the concluding day before they could reach the consensual decision.

The 11th CEC which was mandated by the meeting of the SAARC Council of Ministers held in Kathmandu in August, 2002, eventually decided to conclude the fourth round of South Asia Preferential Trading Arrangement (SAPTA) negotiations and prepare the draft treaty framework for South Asian Free Trade Area (SAFTA) soon.

"We have to make a choice either to intensify our efforts for meaningful economic cooperation to grab the opportunities or to accept a marginalized position in global economy," said Finance Minister Dr. Badri Prasad Shrestha, inaugurating the CEC meet. Bhanu Prasad Acharya, the Secretary at the Ministry of Industry, Commerce and Supplies, chaired the meeting.

The CEC meeting also directed the Inter-Governmental Group (IGG) and Committee of Experts (COE) to speed up their works to conclude the fourth round of SAPTA negotiations. It also noted the need for providing special treatment for the least developed countries by other developing countries of SAARC.

The meeting, among others, decided to hold a special session of commerce secretaries of SAARC member states in early 2003 with the sole objective of preparing a common SAARC position on the fourth ministerial conference of World Trade Organization (WTO) that is set to be held in Mexico in September 2003. Among the SAARC countries, India, Pakistan, Bangladesh and Sri Lanka have already joined the WTO while Nepal is in the process of acceding to the rule-based global free trade regime.

The CEC meeting also discussed on issues relating to trade facilitation† and custom and standards harmonization. It also decided that Dhaka will host the fifth SAARC Trade Fair in December, 2003.

Ever since its inception, SAARC has been promising to deliver on regional economy. The entire South Asia, which constitutes 22 percent of the total world population, however has paltry 1.65 percent share in global GDP. The huge manpower and other natural resources lie untapped.

In order to boost intra-regional† trade among SAARC countries, which stands at less than 5 percent of their total trade, the sixth summit in Colombo (in 1992) agreed to set up an IGG to formulate an agreement to establish a SAPTA by 1997. Because of active support to the proposal by member countries, SAPTA formally came into being in December 1995 well in advance of the date stipulated by the Colombo summit.

In the first round of negotiations under SAPTA, member countries offered trade concessions for 226 commodities, which rose to 1,868 and 3,456 commodities during the second and third round negotiations respectively.

The SAARC Summit in Male in 1997 went a step ahead and agreed that "all efforts should be made for the region to move toward SAFTA by 2001".

As the rest of the world has integrated into regional blocs like European Union, ASEAN, NAFTA and so on, the vision by South Asian leaders to create SAFTA was a timely decision. But the delays and obstructions into materializing it have often left analysts wondering about their political commitment in achieving the target.

As such, the recent decisions by the 11th SAARC CEC meeting could be seen in a positive light. Close on the heels of CEC meet, there will be technical committee meetings on SAPTA and SAFTA. The outcome of these meetings will be indicators of this commitment.