UNI

SAFTA born today with promise of political stability as well

New Delhi, Jan 1:  As the world welcomes the year 2006, the South Asia Free Trade Area (SAFTA) was born today with an avowed objective of completely integrating the economies of the seven SAARC nations into a regional trading bloc in the next ten years with the phase-out of tariff barriers beginning straightaway.

The economic integration between India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan and Maldives has started with the implementation of SAFTA from 01 Jan 2006 with the further promise of ushering in the much-needed political stability in the region.

SAFTA holds a potential of becoming one of the most important economic blocs in the world, if the tariff barriers are removed as per the roadmap drawn.

After all, as Commerce and Industry Minister Kamal Nath has summed it up.'' Every fifth person on the planet would live under the SAFTA trading bloc.'' For starters, member countries - barring the Least Developed Countries (LDCs) will bring down their import duty by 20 per cent by the end of first year. With gradual progressions, customs tariffs would be brought down to five per cent after seven years.

However, the LDCs like Bangladesh would get the phase-out period of 10 years to bring down their tariffs to five per cent.

Since the applied rate as on January one, 2000, is being taken as the base for tariff phase-out, no major duty cuts would be necessary for India since New Delhi has already autonomously cut its tariff substantially since the base date.

The SAFTA would result in a major gain for India which will get an automatic MFN (Most Favoured Nation) status in Pakistan which had all along denied this benefit to the Indian products despite the requirement of the World Trade Organisation. This was a major political issue in Pakistan which loses its sheen with the SAFTA implementation.

 
Major industry chambers like ASSOCHAM and FICCI see great trade potential within South Asia with a lot of untapped market for the Indian industry and trade. '' Now it is up to the industry and trade to make a great success of SAFTA,'' Assocham President Anil Agarwal told UNI.

According to analysts, once the trade increases in South Asia and the mass of the population starts getting the benefits, the contentious political issues like the Kashmir problem between India and Pakistan would take a back seat. '' Trade is a very important motivator for peace,'' they said.

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