SAFTA fully into force as formalities get complete

Kathmandu, March 23- The SAARC Secretariat on wednesday issued a notification announcing the formal enforcement of the South Asian Free Trade Area (SAFTA) Agreement with effect from January 1, 2006, says a press release issued by the SAARC Secretariat today. The Agreement on South Asian Free Trade Area (SAFTA) was signed at Islamabad during the 12th SAARC Summit on January 6, 2004. As required under the SAFTA Agreement, the SAARC Secretariat has to issue a formal notification regarding its coming into force bycertifying that all formalities including ratification have been completed by the member states.

All the member states have since completed the formalities including depositing of their Instruments of Ratification with the Secretariat. The entry into force of the Agreement thus launches the South Asian Free Trade Area, which would be completed by January 1, 2016. The first round of customs duty reduction would take place as agreed by the member states in July/August 2006.

The press release further states that the twelfth meeting of the Committee of Experts (CoE) on SAFTA held at the SAARC Secretariat, Kathmandu on November 20 to December 1, 2005, successfully concluded the negotiations on the issues like Sensitive lists, Rules of Origin, Mechanism for Compensation of Revenue Loss for LDC member states like Bangladesh, Bhutan, Maldives and Nepal, in the event of revenue loss resulting from lowering of customs tariffs in terms of the Agreement and technical assistance to the LDC member states.

It is said that the sensitive lists of products that would be temporarily exempt from reduction in customs tariffs to be applied across the board for all other products. And Rules of Origin specifying the conditions that would have to be met by products to qualify for application of reduced customs tariffs on export to another SAARC member state. Under the Article 7, Trade Liberalisation Programme (TLP) in the first phase, India, Pakistan and Sri Lanka would bring down their customs tariff to 20 per cent by January 01, 2008. As far as the LDC member states (Bangladesh, Bhutan, Maldives and Nepal) are concerned, they would reduce their customs tariff to 30 per cent. It has also been agreed by the CoE that the first tariff reduction would be effected on July01, 2006 by all member states with the exception of Nepal which would do so on August 01, 2006. It is said that India, Pakistan and Sri Lanka would bring their customs tariff down to the level of 0-5 per cent for the export products of Bangladesh, Bhutan, Maldives and Nepal by January 01, 2009.

However, Bangladesh Bhutan, Maldives and Nepal are required to do so by January 01, 2016.With the enforcement of the Agreement, the SAFTA Ministerial Council (SMC) and the SAFTA Committees of Experts (CoE) have also been established under Article X of the Agreement. The SMC is the highest decision making body and is responsible for implementation of Agreement. It consists of Commerce/Trade Ministers of the member states and is required to meet at least once annually or more often as and when considered necessary. The CoE consisting of one nominee from each member state at the level of senior economic official is to support the SMC and monitor, review and facilitate implementation of the Agreement.

The CoE is to meet once in every six months or more often as necessary. The meeting of the SMC is scheduled to be held in Dhaka on April 20, 2006 preceded by the first CoE meeting on April 18-19, according to the press release.