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The South Asian region, one of the poorest regions in the world, has not been able to take advantage of intra-regional trade to boost incomes and reduce poverty due mainly to mistrust among member nations, according to an Indian media.
"Simply signing the South Asian Free Trade Area (SAFTA) agreement will not get the member states far; there has to be genuine long-term commitment to a free trade area. This obviously has political implications as well," says India's influential daily-The Hindu.
"Mistrust among member nations runs high. Most of India's neighbours are suspicious of the size of economy. With India's growth picking up in recent times, its neighbours should realise that SAFTA can enable them to grow their economies faster. On the other hand, India has to provide comfort to the smaller economies that are justifiably worried that their economies may get swamped under the onslaught of Indian corporate giants.
Already India has significant balance of trade surpluses with its neighbouring countries.
Another point to keep in mind is that as per the latest understanding in World Trade Organisation (WTO), substantial concessions have been extended to the LDCs.
As India's importance in the world economy grows, its responsibilities also will grow com mensurately. Hence, even if India wishes to deny, say, Bangladesh some concession under SAFTA by keeping some goods out of the reduction in tariffs, it may not be possible to do so under the WTO agreement.
On the other hand, if Bangladesh does not suitably respond to India's sensitivities in areas such as providing road access to northeastern States like Tripura, illegal migration and supplies of gas, then it cannot expect India to move proactively to provide trade concessions.
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