South Asian ministers to discuss trade

Ministers from South Asia will brainstorm trade integration in the region at a conference on Monday. Ministers from all countries in the region will be present, except for Pakistan which is yet to confirm participation, at the event organised by the Confederation of Indian Industry (CII) along with the World Bank.

The South Asia Economic Conclave will focus on trade policy and investment under the framework of deeper economic integration among India, Pakistan, Bhutan, Nepal, Myanmar, Bangladesh, Afghanistan, Sri Lanka and the Maldives. It will also seek to establish a structured dialogue between the private sector and governments.

CII functionaries told Business Standard the conference would assess progress of the South Asian Free Trade Area (SAFTA). Other issues like cross-border electric grid connectivity and integration of road infrastructure are also to be discussed.

The SAFTA agreement, in force since 2006, serves as the most comprehensive trade framework in the region. SAFTA was fully recognised by all countries when Afghanistan ratified it in 2011.

While India, Pakistan and Sri Lanka were to bring their duties down to zero by 2012 in a series of annual cuts, Nepal, Bhutan, Bangladesh, Afghanistan and Maldives had an additional three years to reduce tariffs to zero.

However, trade in the region constitutes only 1.4 per cent of total world imports and 1.2 per cent of exports, whereas merchandise trade was only 27.9 per cent of the gross domestic product of these nations in 2013, the lowest among trade blocs in the world. On September 20, 2013, the total freight on board value of exports by member states under SAFTA reached $3 billion.

While reduction in the size of sensitive lists is important to increase regional trade, efforts are on to take products out of the sensitive lists that are of export interest to the SAARC member states for trade within South Asia. The removal of all barriers is projected to increase trade in the region by 1.6 times.

With members yet to ratify the trade facilitation agreement of the World Trade Organisation, various countries have embarked on regional trade agreements.

The most talked about them is the Trade Pacific Partnership and Transatlantic Trade and Investment Partnership. As India is not part of either, it eyes agreements such as the Asia-Pacific Economic Cooperation. Its proposed free trade agreement with the European Union is stuck because of the ban by the 27-nation bloc on importing 700 drugs from Hyderabad-based GVK Biosciences.