DHAKA, April 18: South Asian nations want to ease tariffs gradually with the aim of establishing a free trade zone in about a decade, experts at a trade meeting said on Tuesday.

South Asia is a vast economic powerhouse in terms of market potential, natural resources and qualified human resources, said Bangladesh Commerce Secretary Mohammad Abdul Karim at the opening of the two-day meeting in Dhaka.

“The establishment of the South Asia Free Trade Area (Safta) is seen as the first significant step towards deeper economic integration,” Mr Karim said.

Safta will operate within the South Asian Association for Regional Cooperation (Saarc) framework, grouping Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. Afghanistan will join the group next year.

“With 1.4 billion population in the Saarc region, one of the largest areas in the world, the intra-regional trade is very minimal,” Lyonpo Chenkyab Dorji, secretary-general of the Saarc Secretariat, told the meeting.

Intra-regional trade volume among Saarc countries stands at $6.0 billion, or about 4.4 per cent of the total trade of member states worth $135 billion, officials said.

But Mr Karim said: “The region can be expected to fare much better than what other economic blocs such as Europe, North America and Southeast Asia have achieved.”

Intra-regional trade of European Union nations is 55 per cent of the total trade of member states; that of North American Free Trade Agreement members is at 61 per cent, and the Association of South East Asian Nations at 25 per cent presently, officials said.

The Dhaka conference is the first formal meeting by the Safta committee toward the gradual easing of tariffs and other trade barriers.

The Safta agreement signed at a summit in Islamabad in Jan 2004 came into effect in January this year. Tariff concessions under the agreement will be effective from July 2006.

The first phase of the agreement covers the period from Jan 1, 2006 to Dec 2007. Tariffs are to be reduced in two equal annual instalments, to 20 per cent for India, Pakistan and Sri Lanka, and 30 per cent for Bhutan, Bangladesh, the Maldives and Nepal.—Reuters