The Hindu Business Line : Trading by SAFTA norms

There seems to be some hope at last that Pakistan will trade with India under SAFTA (South Asian Free Trade Area) stipulations, which is good news not merely because of the consistency it injects into bilateral trade ties vis-à-vis the SAARC where SAFTA has been accepted (it will become operational by July 1) but also because freer trade will necessarily make several goods cheaper in both the countries. This apart, the extension of SAFTA facilities by Islamabad to trade with India would really mean according the most-favoured nation treatment. That will , undoubtedly, help India much more in the two-way trade given the sheer weight of its economy.

But will this really be the case? At the fag end of the joint statement issued after the third round of talks between the two countries on economic and commercial cooperation (March 28-29), the following was included: "Both sides welcomed the ratification of SAFTA Agreement by all SAARC member countries and expressed the confidence that it would enhance regional trade." The Pakistani Commerce Secretary went out of his way to clarify that since SAFTA was "a multilateral agreement valid for the whole of South Asia" and Pakistan was a signatory to it, "how can we exempt any country in the region from its purview?" Though there is no scope for any divergence, what variant of SAFTA is Pakistan likely to implement vis-a-vis India? In January, a senior Pakistani official had said that since SAFTA had "no clause to give MFN status to India," Islamabad would not grant "any preferential tariffs to New Delhi." This stand is arbitrary because, apart from the explicit links between SAFTA and the WTO provisions on MFN and "national treatment," Article 9 of the SAFTA text clearly states that "concessions agreed to, other than those made exclusively to the Least Developed Contracting States, shall be extended unconditionally to all Contracting States."

Further, there are no `positive lists' of items to be traded under the SAFTA dispensation; only `negative lists' comprising `sensitive items,' which are covered by elaborate stipulations. If SAFTA is to be truly applied to India-Pakistan trade, all the 5,000 or so categories of items figuring in the bilateral trade exchange should be opened up and not just the 773 that Pakistan currently allows to be traded with India. Reports indicate that Islamabad is considering expanding the list to more than 1,050 items, which is certainly some progress towards a freer trade regime but not quite what should be the case under SAFTA. In other words, has Islamabad agreed to extend to New Delhi qualified SAFTA facilities? If so, the matter must be discussed at the appropriate forum and set right at the earliest.

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