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Trade under Safta from Jan in doldrums

December 28, 2005

The News International, Pakistan

Trade under Safta from Jan in doldrums

By Khalid Mustafa

ISLAMABAD: With three days left to meet the deadline, the trade under South Asia Free Trade Agreement (Safta) among the Sarrc counties from January 1, next year is in doldrums as Sri Lanka says it will ratify Safta draft some time in April next year.

However, so far Nepal, Bhutan and Maldives have ratified the agreed Safta draft. The ratification of the draft by the respective federal cabinets of the Saarc countries is mandatory to initiate the trade under Satfa from January 1, next year.

When asked as to why Sri Lanka has not agreed to ratify the Safta draft, an official said that general election has been held in Sri Lanka and the next government will come into place in April and the new government will ratify the Safta draft some time in April.

According to the senior government official, the government of Pakistan is also in a fix as to whether it ratifies Safta draft or not and to this effect three proposals are under consideration which include 1) not to ratify the Safta draft, which is quite difficult as it will bring bad name to Pakistan, 2) ratify the Safta which means the MFN status under Safta to India and New Delhi will exports its items to Pakistan subject to Safta’s positive list, not subject to existing import regime vis a viz India and 3) Pakistan will deal Safta and importable items list from India separately.

When contacted Commerce Minister Humayun Akhtar Khan on the sidelines of his press briefing on the outcome Hong Kong ministerial moot held on Monday told the News that Pakistan will deal trade under Safta and existing import regime vis a vis India separately.

Pakistan has allowed so far the import of 723 items from India and if the Safta gets ratified and trade under it begins from January, the country will have to import the items from India under the positive list that has been agreed under the positive list of Safta.

The official said that New Dehli has indicated it will ratify Safta draft as India will be the benefit at the most because of its competitive industry and large economy of scales. Experts believe in case Pakistan ratifies Safta draft and does not allow the imports of Indian goods as per the positive list agreed under the accord, India can go into litigation against Pakistan under dispute settlement mechanism. And if Islamabad does not comply with the findings of dispute settlement court, India has the right to SAARC Arbitration Council against Pakistan.

 source: The News International