Differences impede reduction of SAFTA sensitive list

A crucial meeting of Working Group of eight South Asian countries, which was supposed to slash the existing long list of sensitive items - on which they have refused to trade at zero tariffs, ended Tuesday without any headway.

The meeting ended inconclusively after the members of South Asian Association for Regional Cooperation (SAARC) remained divided over the modality for downsizing the list.

“India, Pakistan, Bhutan and the Maldives wanted all the members to downsize the items in sensitive list to just 100 products. We could not agree to it,” one of the officials, who participated in the meeting, told Republica.

Contrary to their proposal, officials from other SAARC countries, including Bangladesh, Afghanistan and Sri Lanka, proposed that the list be gradually reduced by 30 percent over the span of next 5 years. Nepal that opposed the former modality, however, maintained its silence on the latter proposal as well.

“We did not express commitment of any sort because we are still to implement the previous commitments on tariff liberalization,” said the source.

The eight-member bloc of SAARC had agreed to trade under free trade agreement in 2004, and enforced the SAFTA regime in 2006, eying to create jobs and reduce poverty through trade integration.

However, the intra-regional trade has not yet made significant headway largely due to the long sensitive list. Presently, the sensitive list has as much as 20 percent of total regional tradable items. Worse is that each member countries have largely included items of others exports interest in the list.

Realizing this constraint, the SAARC leaders during the last Summit asked the Working Group to further downsize the items in the sensitive list so that the members in the region could trade more freely and meaningfully. The meeting in Kathmandu was held as a part of this negotiation.

“Around 3 to 4 modalities for further reduction of sensitive list were tabled during the meeting. But nothing concrete could be decided,” said Naindra Prasad Upadhaya, joint secretary at the Ministry of Commerce and Supply (MoCS).

Given the difference and failure to come up with any concrete plan for further reduction of sensitive list, the Working Group on Reduction of Sensitive List (WGRSL) ended the meeting, deciding to meet again in September.

Officials said all the SAARC members have expressed commitments to further open up their markets. “Hopefully, we will reach to some conclusion when we discuss on the new proposals in the next meeting,” said the official.

As for the separate meeting on South Asia Trade in Services (SATIS), which began on Tuesday, officials said member countries are still negotiating and proposing sectors that they will open for service trade.

“Negotiations are still on in very basic issues,” Upadhaya made a very short comment.

SA countries meet to trim sensitive list, open service trade

Officials from eight South Asian countries are convening in the capital next week to shorten the existing list of ´sensitive items´ on which they have refused to trade at zero tariff so that regional economic integration could gain momentum, generate more trade and job opportunities to the people in the region.

Likewise, another working group of technical officials from South Asian Association for Regional Cooperation (SAARC) is also meeting in the capital to work out a framework for opening services trade in the region.

“We will have separate back-to-back meeting of two different groups under South Asia Free Trade Area, starting from Monday,” said Naindra Prasad Upadhaya, joint secretary at the Ministry of Commerce and Supplies (MoCS).

The first - Working Group on Reduction of Sensitive List (WGRSL) - will negotiate on Monday for downsizing the existing negative list of trading items by 20 percent, as mandated by the SAARC Summit. The second team - Group of Experts - meeting on Tuesday will hold discussions to evolve out a frame work of South Asia Trade in Services (SATIS).

Upadhyaya refused to elaborate, but sources at the MoCS said all member countries have respected the mandate of the Summit to further open up their markets for intra-regional trade and proposed a revised sensitive list, downsizing it from existing long list.

Although SAARC members, including Nepal, India, Bangladesh, Bhutan, Pakistan Sri Lanka, Maldives and Afghanistan, started to trade without tariff barriers from 2006, the intra-regional trade has not yet made significant headway largely due to the long sensitive list. Presently, the sensitive list has as much as 20 percent of total regional tradable items, and worse still, each member countries have largely included items of others exports interest in the list.

“The commitment is there from all members to further open up their markets, but we are still to see how sincerely they will present themselves in this endeavor,” said the source, adding that WGRSL will discuss a new lists that the member countries will table.

So far, countries have not disclosed what exactly they will reduce from the list. “We ourselves are still preparing the list of the items that can be removed from the existing list,” he told Republica.

If the Working Groups finalizes the cuts, officials said member countries will immediately open their trading under zero tariff facility. If Nepal cuts the list, it will still have 998 items in sensitive list for the least developed countries (LDCs) and 1,086 items for the non LDCs.

Presently, Bangaladesh has 1,233 products in the sensitive list for the LDCs and 1,241 for the non-LDCs. Similarly, India has 480 items in list for the LDCs and 868 for the non-LDCs, Maldives has 681 for all seven SAFTA nations, and Pakistan has 936 items, Srilanka has 1,042 and Afghanistan has 1,072 items on the list.

As for the meeting on SATIS, officials said member countries are still to propose sectors that they will open for service trade. “Negotiations were still on in very basic issues. Hence, the meeting will largely focus on nitty-gritty of the framework accord for trade in services,” said the source.