Financial Daily from THE HINDU group of publications
Saturday, Nov 13, 2004
Industry & Economy
SAFTA panel meet to discuss duty concessions
New Delhi , Nov. 12
THE sixth meeting of the Committee of Experts on South Asian Free Trade Area (SAFTA) would be held here for three days beginning from December 2 in order to fine-tune individual member country's obligations and offers on duty concessions. This is to ensure the smooth implementation of trade liberalisation programme of the seven participating countries.
Sources in the Government told Business Line here that the fifth meeting of the Committee of Experts on SAFTA was held in Dhaka on October 4 to 6, where it was informed by the SAARC Secretariat that the seven-member countries had exchanged their respective indicative Sensitive Lists in which they would not like to offer any tariff preferences to others on September 17.
As the size of sensitive lists was unwieldy, it was unanimously agreed, after preliminary scrutiny of size of sensitive lists, that for executing any meaningful negotiations on this issue, it would be expedient for the size of these lists to conform to a manageable extent as approved by the previous decisions of the Committee, the sources said.
With around 6,000 tariff lines mostly of competing goods, the seven-member South Asian Association for Regional Cooperation (SAARC) is in a quandary as to what goods to offer for preferential treatment, while safeguarding the interests of the individual domestic goods manufacturers. They said that even textiles and clothing items numbering 600 would pose formidable difficulty for any concessions to be granted to other members as most of these countries fiercely compete for capturing a size of the cake in the imminent quota-free regime, particularly in the developed economies.
Trade analysts also question the wisdom of exchanging tariff concessions among countries producing similar goods and competing in the global market for a share.
The sources said that the New Delhi meeting of the next month would have to zero in on a solution to two pending issues. They pertain to whether the SAPTA concessions would come to an end for the least developed contracting States such as Bangladesh, Bhutan, Nepal and Maldives once the Non-Least Developed Contracting States such as India, Pakistan and Sri Lanka complete the tariff reduction schedule for the LDCs; secondly, in the absence of a tariff reduction schedule, the question was whether the Non-Least Developed Contracting States had the flexibility to follow any schedule of their convenience or to coordinate to hammer out a uniform pace of reduction of tariff.
The sources said that in the Dhaka meeting held last month, the delegations from the LDCs tabled their draft proposal for the establishment of a mechanism for compensation of revenue loss when the tariff concessions cover a larger number of goods.
However, the non-LDCs members contended that this is a complex issue since the revenue compensation mechanism to be put in place ought to be a realistic one and also take into consideration the likely expansion of trade due to implementation of SAFTA as well as other economic gains.
The proposed mechanism could also provide for technical assistance to LDCs for loss of revenue arising out of tariff concessions exchanged across-the-board, they said.
It was also agreed at the Dhaka meeting that the LDCs would review the Consolidated Wish List with a view to indicating the priority areas of assistance and elaborating on the nature of assistance sought.
Besides, the non-LDCs would need to consult their relevant agencies and institutions so as to identify the areas in which assistance could be provided. A detailed discussion on this would be held at its Sixth Meeting here on December 2, the sources hinted at.
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