The Hindu Business Line : Phased tariff liberalisation from 2006

SAARC officials are set to discuss four issues relating to rules of origin, sensitive list, mechanism for compensation of revenue loss for the least developed countries and technical assistance to LDCs for finalising the same.

New Delhi , Sept. 11

AS the deadline for the launch of the South Asian Free Trade Agreement draws closer, the seven participating members of the South Asian Association for Regional Cooperation (SAARC) have drawn up a hectic schedule to resolve the four outstanding issues pertaining to SAFTA.

Sources in the Government told Business Line that SAFTA envisages a phased tariff liberalisation programme beginning from January 1, 2006 and in two years, non-least developed countries (India, Pakistan and Sri Lanka) would bring down tariffs to 20 per cent, while LDCs (Bangladesh, Bhutan, Maldives and Nepal) would bring them down to 30 per cent. Subsequently, non-LDCs will bring down tariffs from 20 per cent to 0-5 per cent in five years, while LDCs will do so in three years. But as LDCs would suffer even at this extended phase of tariff concessions, a compensation mechanism has also been evolved in their favour.

With just three and a half months for the scheduled advent of SAFTA, officials of the SAARC member countries had got themselves into the final phase of negotiations on the four issues. These relate to rules of origin, sensitive list, mechanism for compensation of revenue loss for the least developed countries and technical assistance to LDCs for finalising the same in order to ensure the smooth implementation of SAFTA on the stipulated date.

The sources said that so far ten meetings of the Committee of Experts (COE) including the latest one in Kathmandu from August 31 to September 3, had been held to arrive at a consensus on all these issues and one more meeting is being proposed to be held in Islamabad in the second week of October. This meeting is slated to be crucial as it would give final shape and content to the negotiating positions on all outstanding issues.

After this crucial final meeting of the Committee of Experts, there would be a meeting of the Commerce Secretaries of the SAARC countries under the umbrella of the Committee on Economic Cooperation (CEC) to be followed by the Commerce Ministers of the SAARC countries in Islamabad in October. Once the trade ministers of the SAARC countries give their imprimatur to the SAFTA draft incorporating the finer points discussed at different levels by the officials and ministers of the member countries, the whole issue would be put before the Heads of SAARC member countries at the highest level, scheduled to meet in Dhaka (Bangladesh) in November for their final touches and to overcome any glitches, the sources said.

At the Tenth COE meeting in Nepal, the Draft SAFTA Rules of Origin and the draft Operational Certification Procedures were finalised, besides some discussions on derogation in terms of change in tariff heading and value addition for the rules of origin, the sources said.

However, on the issue of sensitive lists where tariff concessions are excluded, consensus continues to elude as India, Pakistan and Bangladesh apprehend injury to their respective domestic industry if competing products enter freely into each other markets at preferential duties.

The COE noted that the final sensitive list of each country would comprise two lists i.e., one for LDC countries and the other for non-LDC countries.

India is yet to conclude bilateral negotiations on indicative sensitive lists with both Pakistan and Bangladesh, even as this is not a major bone of contention with Sri Lanka as India has a free trade agreement with Sri Lanka already.

The sources said that at the recent Kathmandu meeting of COE, the mechanism for compensation of revenue loss has been hammered out between the non-LDCs and LDCs and also the operational modalities for providing technical assistance to LDCs.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page