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Meeting on SAFTA implementation on 20th

Daily Times, Pakistan

Meeting on SAFTA implementation on 20th

By Sajid Chaudhry

7 March 2006

ISLAMABAD: The first meeting of the South Asia Free Trade Area (SAFTA) Council of Ministers (SMC) will review and finalize the SAFTA implementation arrangements on March 20 at Dhaka.

The SMC meeting will review the progress towards the launch of Trade Liberalization Programme (TLP) under the SAFTA agreement with effect from July 1, 2006 among all the contracting states.

Commerce and trade ministers from all seven members of the South Asia Association for Regional Cooperation (SAARC) that are Pakistan, India, Sri Lanka, Bangladesh, Nepal, Bhutan and the Maldives will attend the meeting. Pakistan’s Commerce Minister Humayun Akhter Khan will represent Pakistan at this crucial meeting.

The SMC is the highest decision-making body of SAFTA and is responsible for administration and implementation of this agreement and decisions and arrangements made within its legal framework.

According to the SAFTA agreement, the SAFTA Council on Minister (SMC) shall meet at least once every year or more as and when considered necessary by the contracting states. Each member country shall chair the SMC for a period of one year on rotational basis in alphabetical order. A Committee of Experts (COE) will support the SMC with one nominee from each contracting state at the level of a senior economic official with expertise in trade matters.

The COE shall monitor, review and facilitate implementation of provisions of the agreement and undertake any task assigned to it by the SMC. The COE shall submit its report to the SMC every six months. The COE will also act as a Dispute Settlement Body under the SAFTA agreement.

The COE shall meet at least once in six months or more often as and when considered necessary by the contracting states. Each contracting state will chair the COE for a period of one year on rotation basis in alphabetical order. The SMC and COE will adopt their own rules of procedures for smooth functioning of these organizations.

Pakistan and India, the two major contracting states, have already ratified the SAFTA agreement and other contracting states are expected to complete the ratification process by June 30, 2006.

All the members of SAARC, Pakistan, India, Sri Lanka being developed countries of the association and four least developed countries, Bangladesh, Nepal, Bhutan and the Maldives, are aiming to enforce this important trade agreement from July 1, 2006.

The SAARC Agreement has four annexes, that is, the list of sensitive items, Rules of Origin, technical assistance to least developed countries of SAARC and Revenue Compensation Mechanism for these countries. It has been decided with consensus that all member countries would undertake the first tariff reduction of around 5% from July 1, 2006. Nepal however will do so in August, 2006. Besides, the Revenue Compensation Mechanism would be available to the LDCs of SAARC not before July 1, 2007. Accordingly, before July 2006 only the annex relating to Technical Assistance to the LDCs can become operational.

Pakistan and India had reduced their negative lists further for enhancement of trade in real terms recently. Pakistan had reduced its negative list from 1,310 to 1,185, and in response to Pakistan’s measure, India had also slashed its negative list from 927 to 834, an official confirmed.

The SAFTA agreement shall come into force on July 1, 2006, the member states shall reduce their tariffs through Trade Liberalization Programme that would be implemented in two phases. In the first phase, Pakistan and India would reduce tariffs to 0 to 5 percent within seven years, that is, by 2013, Sri Lanka within 8 years, that is, by 2016 and the four LDCs of SAARC by 2016. Pakistan, India and Sri Lanka, however, would complete their Trade Liberalization Programme for the four LDCs within three years, that is, up to 2009.