SAFTA may double up regional trade by 2010

05 Jan '06

4 min read

Federation of Indian Chambers of Commerce and Industry (FICCI) stated that it feels that the total intra regional trade among SAARC countries which is around US$ 7 billion could grow to US$ 14 billion by 2010 provided the existing tariffs are reduced within the stipulated time frame of SAFTA the sensitive lists of all the SAARC countries are limited and trade facilitation infrastructure is strengthened.

The pact holds huge potential for intra regional trade growth as over 90 per cent of the imports by South Asian countries are sourced from outside the region and a major part of exports of South Asia is made to the countries that are not part of the group.

In spite of SAPTA, the intra regional trade in SAARC could not go above 4 percent of the total trade of the region due to its halting progress and very limited coverage of the trade basket.

With SAFTA now in place, the region is all set to reap the real benefits of regional trade liberalization on the pattern of other trading blocs.

The intra regional trade which was only 7 percent in ASEAN region before grouping, shot up to 49 percent by 2003. Similarly in NAFTA, it was only 12 percent before grouping, but became 44 percent by 2003.

In EU, it was 23 percent in early 80s but went upto 67 percent in 2003. Business community has great hope from SAFTA, which may be able to multiply intra regional trade similar to other groupings.

That 5500 tariff lines under SAFTA have been liberalized and are expected to move towards zero tariff for Non - LDC by the year 2013 and for LDC by 2016 is indeed welcome. But unless the tariff lines cover items, which have trade potential and member countries have small sensitive lists, the very purpose & spirit of this agreement shall be defeated.

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