BANGLADESH INSTITUTE OF INTERNATIONAL AND STRATEGIC STUDIES

Outline

IMPLEMENTING THE SOUTH ASIAN FREE TRADE AGREEMENT (SAFTA) : CHALLENGES AND POSSIBLE ROADMAP

Author: M. Ali Rashid, A.K.M. Atiqur Rahman

DOI Link: DOI: https://www.doi.org/10.56888/BIISSj2004v25n4a1

ABSTRACT

The members of the South Asian Association for Regional Cooperation (SAARC) established the SAARC Preferential Trading Arrangement (SAPT A) in December 1995. More recently, in January 2004 the SAARC member states signed the South Asian Free Trade Agreement (SAFTA) which will enter into force on January 1.2006. Deeper economic integration is being pursued in South Asia to reap the benefits from enhanced levels of intra-regional trade and investment flows. An analysis of the SAFT A Agreement reveals some major deficiencies which. if not rectified very quickly, may substantially reduce expected benefits from establishing a free trade area. These shortcomings of the Agreement have taken the form of a relatively slow tariff liberalization program; gray areas in provisions relating o non-tariff and para-tariff barriers; absence of negotiating modalities and deadlines with regard to concretizing rules of origin criteria; an apparent lack of consensus on issues of 'sensitive lists', revenue compensatory mechanism for LDC members, technical assistance for LDC members, and harmonization of legislation; and absence of provisions to deal with unfair trade practices and investment promotion. A roadmap has been suggested for effective implementation of SAFTA. The policies suggested are: acceleration of the trade liberalization program, phasing out of non-tariff and para-tariff measures by a specified date, negotiation and incorporation of rules of origin criteria in the Agreement before it comes into force, negotiating the 'sensitive lists' in a WTO-consistent manner, designing an unambiguous revenue compensatory mechanism and ensuring technical assistance for LDC members, and incorporating provisions for dealing with unfair trade practices and promoting intra-regional investment.

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