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SAFTA

SAFTA

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Published by: farhanaslam on Jul 16, 2009
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05/18/2012

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Pakistan is likely to benefit from the agreement on a SouthAsian Free Trade Area (SAFTA) only in the longer run while inthe short term high power tariffs in the country are likely tohurt the country’s prospects.“When power tariffs would go down as is being promised byindependent power producers under their respectiveagreements, then our input cost would be reduced,” he said.Many of the thermal power generation are being shifted intogas and Ghazi Barotha Hydropower Project is alreadygenerating the cheap electricity more than 900 mw of electricity, while it will generate 1,450 mw by June 2004.He said India is extending highly subsidized electricity to itsfarmers and some areas farmers are being given the electricityfree of cost, adding at present India has 200 dams which areproducing the cheaper hydel electricity due to which Indianagriculture products are cheaper than Pakistani products.Terms of the treaty: Pakistan and India will bring down theirtariffs to zero to five percent in the next seven years, SriLanka will do the same in eight years while Bangladesh, Nepal,Bhutan and Maldives will bring their respective tariffs to asimilar level in 10 years under the SAFTA treaty.A senior government official told Daily Times the SAFTA treatywould come into force from January 1, 2006 and would be fullymaterialized by December 31, 2015.He said the treaty will enter into force on the due date uponcompletion of four procedural formalities which includedformation of sensitive lists, rules of origin, revenue losscompensation mechanism and ratification by all memberstates.He said the non-least developed countries (non-LDCs) willreduce their tariffs to 0-5 per cent in a period of seven yearsfrom the date of entry into force of the agreement.Under the agreement, Pakistan and India will reduce theirtariffs to zero to five per cent in a seven year period, while SriLanka will do the same in eight years of time.Other countries including Bangladesh, Nepal, Bhutan andMaldives will cut their tariffs to 0-5 per cent in 10 years.
 
The official said every country would have to make twosensitive lists of products on which tariffs will not be reduced,and added that issues like anti-dumping duties, countervailingduties and safeguard measures will be dealt in accordancewith the World Trade Organization (WTO) principles as perreservations on the part of Bangladesh.He said it has already been decided that the sensitive listswould be reviewed after every four years.The official said under the agreement a Dispute SettlementBody (DSB) would be set up to resolve any dispute among theSAARC countries.The decision of the DSB will be binding on all member states,the official said, and added that the SAFTA ministerial councilwill work as an appellate body for dispute settlement. “SAARCcountries had earlier developed consensus on some of the keyissues in the last meeting of the committee of experts held inKatmandu,” he said.He said the commerce ministry was earlier negotiating withthe donor agencies to conduct studies on SAFTA, TradeInvestment Facilitation Agreement (TIFA) and Most FavoredNation) MFN Status to India, but in wake of changingatmosphere between the two rival nations, it was decided toink the SAFTA treaty.“India would be an instant beneficiary of the SAFTA,” he said.The official said that least developed contracting states,during the technical talks at commerce secretaries’ level, hadshown their apprehension about the timeframe but later withthe exception of Bangladesh, the other countries agreed.He said Bangladesh was the only country which continuedresisting the signing of SAFTA as it was not in the favor of implementing the rules and regulations relating to WTO, anti-dumping, countervailing and safeguard measures.The commerce secretaries’ talks failed to develop consensuson SAFTA, he said, and added that it was during the counsel of ministers meeting that members reached an agreement.United States came into play: Sources say the United States of 
 
America was very keen on developing consensus on SAFTA andthe US commercial counselor continued to monitor the SAFTAtalks at secretaries’ level talks and was in constant touch withPakistani officials to this effect.A source said that after the failure of talks at the commercesecretary level, the US played a role to convince Bangladesh tosign the SAFTA as its economy is also dependent on the US.“The US wants harmony in the region which can only beachieved if the economic interests of the SARRC countries areattached with each other,” the source said, and added that theUS is keen to reap economic gains from this region as well.http://www.dailytimes.com.pk/default.asp?page=story_6-1-2004_pg5_1SAFTA: will it turnaround the regional economies?
By M. Sharif 
Great expectations have overrun pessimism and cautionexpressed by diehard antagonists and moderates of Indo-Pak detente that seems to be in the making after signing SAFTA on6 January 2004 in Islamabad. It has been aired and declared tobe an economic imperative to turnaround the regionaleconomies, which support nearly one-fourth-world populationand where fifty per cent of world’s poor people live belowpoverty line. How will this come about? SAFTA agreement hasstill two years to go before it comes into force and that too if itwould be ratified by all the seven member states. From theday of its coming into effect, it would need another sevenyears to reduce intra-regional trade tariff between 0-5 per centby the developed countries which are India and Pakistan and10 years for other five SAARC member states which areconsidered LDCs according to UN laid down policy and havebeen accepted as such. There have to be certain cogentreasons to ride on the waves of ‘Great Expectations’. We canhave a look at the expectations particularly with reference toground political and economic realities that prevail at presentand are likely to prevail in near future. 

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