ISLAMABAD: Finance Minister Shaukat Aziz has expressed the hope that successful implementation of South Asia Free Trade Agreement (Safta) would help generate economic activity, which would ultimately benefit people of the region.
Talking to Dawn on Saturday the finance minister said that Pakistan believed in regional, bilateral and multilateral trading system to get maximum benefit from preferential trading arrangements.
He expressed the hope that Pakistan would increase its share in the regional trade under Safta. According to him, the Safta would not only be good for more trading among the member countries but would also facilitate and enhance flow of foreign direct investment in Pakistan.
Currently, the official trade between Pakistan and India was estimated at $250 million. While trade through unofficial channels was estimated at more than $1 billion. India was one of the countries in the region, which had more trade with Pakistan in comparison to other Saarc-member countries.
With the coming into effect of the Safta agreement, the unofficial trade (smuggling) or trade through a third country would be reduced to a great extent which would help the member countries to generate more revenues for their national kitty.
At the sidelines of Saarc meeting held recently in Islamabad, Mr. Aziz had said that Pakistan had shown its willingness to enhance its trade relation with India as at the same time it had sought solution to the core issue of Kashmir.
When asked about the possible impact of the Safta on Pakistan's industry, he said that there was a concept of sensitive list under Safta through which protection would be provided to the local industry.
He said the lists would be prepared in due consultation with all relevant stakeholders before finalizing it.
To a question, he said the ministry of commerce will invite the views of all sectors before considering any item for duty reduction under the Safta. "We have to develop the sensitive list intelligently," he said.
There would be two sensitive lists, one for the LDCs (Bangladesh, Sir Lanka, Maldives, Bhutan and Nepal) the other for non-LDCs (Pakistan and India). The LDCs would have longer lists of sensitive items in comparison to those of non-LDCs to provide protection to their industry.
"I do not think that there will be any loss to our industry. But free trade would rather promote our industrial growth," he remarked. The finance minister said that the free trade would also encourage the private sector to get benefit from the preferential trading arrangement.
"Our economy has the strength to compete with those of the region. We are competitive in many products. This would provide more access to our products in the region," he said.
The Saarc-member countries signed Safta on January 6, 2003 with a pledge to scale down their tariff in two phases to 0-5 per cent that will come into force on January 1, 2006.