ISLAMABAD, Nov 28: The enforcement of South Asia Free Trade Area (Safta) is likely to be delayed by at least six months to July 1, 2006 as there are a few issues which will be taken up by the technical committee of Saarc in Kathmandu on Tuesday.
Informed sources told Dawn on Monday that the technical committee would look into the matter of finalizing the sensitive lists, rules of origin and mechanism for compensation for revenue loss, which was vital for the enforcement of the Safta by due date of January 1, 2006.
Pakistan will be represented by a deputy secretary of the commerce ministry in the meeting, which indicated that the seriousness of the member countries towards the timely implementation of the Safta.
The sources said that following no consensus of the Saarc member countries in these areas, the Dhaka Summit held recently in Bangladesh had adopted three options about the enforcement of the agreement.
According to the option one, that in case all these issues were resolved in principal, then the agreement would come into effect early next year. According to option two, excluding the issue of compensation, which would be resolved in the next six months, there was an agreement among the member countries on the other two areas.
The option three suggested that a new timeframe for entry into force of the Safta agreement would have to be given and suggested that at least six more months may be given so that the agreement enter into force on July 1, 2006.
The agreement signed by the member countries in Islamabad in January 2004 was announced to come into effect from January 1, 2006. This agreement would be fully operationalized by December 31, 2015 within the Saarc member countries.
Under the Safta rules of origin, the member countries are discussing the issues like input imported from another Saarc country needs to qualify the criteria of origin, final product exported to a Saarc country needs to qualify the criteria of origin — 40 per cent to 30 per cent plus or product specific rules.
It was also under consideration that product specific rules would apply to trade of all such products within Saarc whether by LDCs or non-LDCs without any derogation and no product specific rules for textile and garment sector would be put in place. The sources said that when there was an agreement in these areas then the sensitive lists would be finalized, which is the next important pillar of the agreement.
Under the mechanism for compensation of revenue loss, the non-LDCs proposed capping of compensation to be provided based on average of expected annual revenue loss. The non-LDCs have also proposed 3-5 years from entry into force of the agreement a period for compensation as against the demand of 5-7 years by the LDCs. Moreover, the non-LDCs were also restricting the revenue loss of customs duties for imports of non-sensitive products. However, the Saarc member countries have only developed consensus on the issue of technical assistant to the LDCs.
This showed that for reaching to a conclusion, the member countries needed more time for developing consensus before the agreement comes into effect, the sources added.
