The SAFTA mirage

SAARC trade ministers could not manage to meet even once between the November 2001 Doha Ministerial and the August 2003 Cancun Ministerial Conference of World Trade Organisation (WTO). There is no such thing as a 'common SAARC position' at the gatherings of the WTO, and this is because the trade interests of the WTO members from Southasia vary a lot. Against this backdrop, the adoption of the South Asian Free Trade Agreement (SAFTA) at the January 2004 SAARC summit in Islamabad could be considered a landmark decision. SAFTA is supposed to open a new vista of regional economic cooperation and integration. SAARC member states seem to have, to some extent, set aside their parochial interests and apprehensions and decided to move forward with an open mind towards creating a free trade area. First, the sense of urgency for SAFTA is laudable. Second, the normalisation of India-Pakistan relations becomes very critical for the operation of the free trading regime in its true sense.

SAFTA is slated for launch in 2006, with a ten year period for full-fledged implementation. The treaty has taken up some of the issues with very clear provisions including those on tariff reduction and the procedural aspects of the application of balance of payment and 'safeguard' measures, as well as a dispute settlement mechanism. The treaty has clearly stipulated the actions that contracting states can take while facing balance of payment difficulties, during import surges or in the case of disputes. Likewise, the treaty has also laid down a clear path for tariff reduction, which spans ten years, beginning 2006.