IT is a welcome development that the seven members of the south Asian Association for Regional Cooperation (SAARC) could finally sort out their remaining differences on a number of issues, including the negative lists, tariff and compensation mechanism before operationalisation of the much-awaited South Asia Free Trade Area (SAFTA). The Committee of Experts (CoE) deserves appreciation for accomplishing a difficult job. However, all credit goes to the heads of states and governments of the SAARC member nations for displaying a strong political resolve to put into effect the SAFTA at the earliest. The signal given by leaders at the 13th SAARC summit held in Dhaka recently had made the job easier for the CoE.
However, the CoE, reportedly, has decided to delay the mutual trade under the SAFTA arrangement by six months for understandable reasons. The process of duty reduction under the trade liberalisation agreement would require some internal mechanism, approvals etc., in each of the constituents of the regional grouping. None would mind a six months' delay considering the time spent on getting the SAFTA on track and the vast potential the deal has in increasing the inter-regional trade. It is estimated that the SAFTA would raise the current level of inter-regional trade from $6.0 billion to $ 14 billion annually.
Since all hurdles to the operationalisation of the SAFTA are now over, the moot question that would obviously agitate the minds of all concerned is: How far would Bangladesh be benefited by the arrangement? There is no denying that India with its vast array of exportable goods stands to be benefited more than anyone else. It already enjoys edge over all other members so far its exports to Bangladesh are concerned because of its close proximity and the price competitiveness. Imports from that country are expected to increase further due to tariff reduction by Bangladesh as agreed under the SAFTA. None should object to that since traders and industrialists would naturally rush to those sources where they would get goods and commodities of their requirement at competitive prices. But such an opportunity does not come without a price. The country would be losing a substantial amount of revenue in the form of reduced duties and the domestic industries would come under an uneven competition from cheaper imported goods. To address these two particular problems, the issues of negative list of products and compensation mechanism for the least developed members of the SAARC were included in the negotiations on the SAFTA. The conflicting interests of member countries coupled with political mistrust had often clouded the prospect of the SAFTA. Since the details of the final negotiations on negative lists and compensation mechanism are yet to be made public, it is difficult to say how best the interest of Bangladesh has been protected.
Reportedly, India has agreed to give duty-free access to up to 6.0 million pieces of readymade garments from Bangladesh every year provided the latter imports the required fabrics from the former. Bangladesh has sought similar facility from Pakistan. Islamabad would soon convey its decision on the issue. It does not seem befitting that Bangladesh would concentrate its focus on one single product everywhere. Unfortunately, our entrepreneurs have not employed their best efforts to diversify exports and become competitive in other areas. The SAFTA offers an opportunity to boost exports in the regional countries. The government and local entrepreneurs should make all out efforts to exploit fully.