28 March 2004	Sunday	06 Safar 1425

KARACHI, March 27: The South Asian Free Trade Area (Safta) agreement was signed on January 6 at Islamabad this year during the Saarc summit. It is way ahead Sapta (South Asia Preferential Trade Agreement) , the arrangement amongst Saarc nations that govern negotiations on commodity-by-commodity basis.

The member countries are supposed to ratify the agreement within two years by 2006. The Safta process will commence after that. If everything goes as planned the agreement envisages hitting the goal of free trade area in 12 years by year 2016.

The Safta is focussed on trade in commodities. It has left out trade in services as being too controversial at this stage. It, however, suggested regularization of informal labour movement within the region.

This pact provides an overall framework for the Saarc members within which they may work on further details to make Safta viable and beneficial. Following are the four main pending issues in Safta agreement.

1. Safta Rules of Origin; 2. Sensitive Lists; 3. Technical assistance to the least developed contracting states; and 4. Mechanism of compensation of revenue loss for the least developed contracting states.

A Committee of Experts (CoE) comprising of seven members from each Saarc nation has been mandated to negotiate agreement on the points mentioned above.

The CoE held its first meeting at Kathmandu in the last week of February 2004. The committee revised the text of the draft of Safta Rules of Origin. It finalized the indicative maximum size of sensitive lists for less developed countries and for non-less developed countries.

To facilitate early finalization of the outstanding issues, the committee decided the time and venue of the next meeting i.e. May 3-5 in Pakistan and also suggested schedules for a trail next four meetings.

The participants of the meeting confirmed that business in the first meeting was carried out in a very congenial atmosphere of understanding and accommodation and spirit of give and take. The CoE has set December 2004 as a deadline for the conclusion of negotiation on the four outstanding issues.

The formal approval of member states will be sought at the 13th Summit in Dhaka in January 2005. The member states than have to ratify the agreement, which would involve seeking the approval of parliament in some member states. Subsequent to the ratification will be the process of notification so that on the due date of January 1, 2006, the free trade regime is in place in all member states. The issue of notification, in some cases, is tied to the budgetary process and the beginning of the respective fiscal year.