The Hindu Business Line : Afghan entry to SAARC will lead to $2-b gain for sub-continent

The findings
The study said that out of the $2-billion of trade gains through Afghanistan's participation in SAFTA, as much as $606 million would accrue to Afghanistan.
The scope of coverage of India-Afghanistan trade relations would be greater under SAFTA than under their bilateral extant Preferential Trading Agreement, the study said.

New Delhi March 28 Ahead of the SAARC Summit slated to be held here on April 3-4, an official study has said that the entry of Afghanistan as the eighth member of the South Asian Association for Regional Cooperation (SAARC) and its participation in SAARC Free Trade Agreement would result in trade gains of $2 billion to the sub-continent.

Commissioned by the Department of Commerce at the initiative of the Minister of State for Commerce, Mr Jairam Ramesh, and made by the Research & Information System (RIS) for Developing countries' fellow, Mr Ram Upendra Das, the study said that trade linkages of Afghanistan with other countries have remained low. More specifically with SAARC members, they have not only been low but also focussed in select sectors.

As such, Afghanistan must participate in SAFTA as an active member.

Wider coverage

The study said that out of the $2 billion of trade gains through Afghanistan's participation in SAFTA, as much as $606 million would accrue to Afghanistan.

It has been found that the scope of coverage of India-Afghanistan trade relations would be greater under SAFTA than under their bilateral extant Preferential Trading Agreement, the study said

When contacted about the study and its implications, Mr Jairam Ramesh told Business Line here that the advent of Afghanistan into SAARC fold would accord fresh impetus to "regional connectivity and provide an opportunity for Central Asia and South Asia to come together".

This, he said, was because of the strategic location of Afghanistan as it straddles between the energy-rich Republics of Central Asia on the one hand and South Asia on the other, sharing borders with Iran, Pakistan, China, Tajikistan, Turkmenistan and Uzbekistan.

Trading partners

According to the study, in terms of global trade integration, Afghanistan is more integrated on the export front with imports as a proportion of GDP at 83 per cent than on the export front with the latter being 33 per cent of the GDP.

Afghanistan's major trading partners include Pakistan, India, the US and France for its exports and Pakistan, the US, India and South Korea as import sources.

It primarily exports commodities such as fruits, nuts, carpets, wool, cotton, hides, pelts and precious gems, while main imports include capital goods, food, textiles and petroleum products.

The study said India and Afghanistan should cooperate to derive mutual trade benefits under SAFTA process of phased trade liberalisation programme and agreed lists of commodities to be traded on which market access negotiations could be focussed.

It suggests that the present sensitive list of India for the least developed countries under SAFTA could be maintained as it mostly takes care of the country's domestic sensitivities in both agriculture and manufacturing.

Stating that meagre trade gains as per the estimates of the study are due to limited export supply capability of most of the SAARC members, the study said that in order to overcome this constraint, strengthening of trade-investment linkages ought to be focused on. Policy mechanisms need to be set in place to enable efficiency-seeking industrial restructuring in various domains such as minerals, communications and agri-business. A special thrust must be given to areas such as power, construction, energy and urban management from the investment angle, given the locational advantage of Afghanistan in joining various parts of Asia.

Transit and trade facilitation would be crucial for reaping trade gains by Afghanistan under SAFTA. In this context, the study favours that SAARC must institute Regional Transit Arrangements. Several countries such as Bangladesh, Bhutan, Nepal and Afghanistan would benefit from such arrangements.

More Stories on : Foreign Trade | Economy

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