S. Asian nations meet to set free trade agenda

S. Asian nations meet to set free trade agenda

NEW DELHI (Reuter): Commerce ministers of seven South Asian
countries began talks yesterday to assess progress on a month-old
trade pact, and to set the agenda for liberalizing trade in a
region rife with political conflict, officials said.

The South Asian Association for Regional Cooperation (SAARC)
-- comprising India, Pakistan, Sri Lanka, Bangladesh, Nepal,
Bhutan and the Maldives -- wants to keep up the momentum on their
preferential trading accord, launched on Dec. 7 granting mutual
tariff concessions to stimulate regional trade.

Analysts say the 226 tariff concessions granted so far are
insignificant. But SAARC ministers say they are an important
first step to closer economic cooperation, and plan to extend
them.

The ministers will launch the first SAARC trade fair in New
Delhi on Jan. 9.

SAARC, which includes some of the world's poorest countries,
is home to 1.2 billion people and has a combined gross domestic
product of US$300 billion.

An inter-governmental working group, set up by SAARC commerce
ministers after a November meeting, has been mandated to identify
ways to make the tariff cuts broader, deeper and more meaningful,
officials said.

SAARC aims eventually to transform the region into a free
trade zone by the year 2000, or 2005 at the latest.

Indian Prime Minister P.V. Narasimha Rao is scheduled to
inaugurate the two-day talks on Monday. The Indian delegation
will be led by Commerce Minister P. Chidambaram.

The talks will cover trade barriers, logistics of cross-border
trade, infrastructure obstacles to trade, and a review of the
region's trade to date, officials said.

Indian Foreign Minister Pranab Mukherjee said last week that
commerce ministers will discuss issues including zero-tariff
concessions to SAARC members to boost trade.

"We would like to encourage more openness," he said. But
sticky relations among SAARC members, especially India and
Pakistan, have severely limited cross-border regional trade.

Contentious bilateral issues are banned from the SAARC forum.

Trade among SAARC countries is about three percent of the
total external trade of SAARC members, extremely low compared to
intra-regional trade elsewhere, officials said.

Ties between Pakistan and India, who have fought three wars
since independence in 1947, warmed up in November when SAARC
commerce ministers met in Delhi to finalize the SAARC
preferential trading agreement, or SAPTA.

But since then, there have been conflicting signals from
Islamabad on granting Most Favored Nation status to India, as
required under the World Trade Organization.

Pakistan Commerce Minister Ahmad Mukhtar said in December that
his country was bound to open trade borders with India but that
it would not give it MFN status.

Pakistani businessmen favor free trade with India, but want
protection for select industries seen as vulnerable to Indian
competition, industry groups in Pakistan have said.

SAARC has been criticized by its own delegates as little more
than a debating society in its ten years, though it cooperates
modestly on areas from technology to urban development.

Frustrated by the pace of regional cooperation, a majority of
SAARC members renewed calls on the organization's 10th
anniversary in December for a SAARC mechanism to air political
disputes.