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Saarc defers free trade dispute

BBC News

Saarc defers free trade dispute

By Waliur Rahman, BBC News, Dhaka

2 August 2006

South Asian foreign ministers have agreed to defer a dispute between India and Pakistan over the implementation of a regional free trade agreement.

They ended their two-day meeting in the Bangladeshi capital, Dhaka, with a decision to refer the matter to a Saarc forum of commerce ministers.

The meeting however decided to include the US, South Korea and the EU as observers at future Saarc summits.

India has accused Pakistan of jeopardising the free trade agreement.

The South Asian Free Trade Area (Safta) agreement came into effect earlier this year.

But Delhi says Islamabad has failed to implement key tariff reductions for goods imported from India when it issued a notice last month limiting Safta tariff concessions.

"When you enter into a contract you enter into an obligation, and that obligation has to be fulfilled," junior Indian Foreign Minister E Ahamed said.

"The notification issued by Pakistan is a negation of the contract."

’No access’

But the Pakistani Foreign Minister, Khurshid Mahmud Kasuri, said there was a reason for treating India differently under the free trade area deal.

He said while Indian exports to Pakistan have increased by about 400%, Pakistan failed to manage entry into India’s market, even in areas where the country has a competitive edge.

"So we needed to look at this and we looked at it holistically. Pakistan has had a very positive attitude from the very beginning and deeds speak louder than words," he said.

Bangladesh Foreign Minister Morshed Khan said South Asian trade ministers would try to resolve the issue in their next meeting and would report to the heads of the governments during their next summit in Delhi early next year.