HIMALAYAN NEWS SERVICE
KATHMANDU: Nepal will focus on implementation of earlier agreement on tariff reduction during South Asian Free Trade Agreement (SAFTA) meeting scheduled from June 11 -13 in Maldives.
“A joint secretary level meeting of SAFTA will be held on June 11-12, while ministerial meeting will be held on June 13,” said under secretary at the Ministry of Commerce and Supplies, Binod Acharya.
During the SAFTA working committee meeting in Kathmandu on March 28–31 — that was supposed to finalise removal of 20 per cent products from the sensitive list apart from expansion of service sector — the participating nations sought more time to hold internal consultation before committing to reducing the sensitive list.
The working committee meeting had also mandated to prepare three schedules of commitment to liberalise South Asian regional trading of services that will be presented this time but it had been unable to reach the conclusion on products to be reduced from the sensitive list.
Nepal was requested to take out 259 products from the sensitive list but due to revenue implications, Nepal said it could not reduce the tariffs on all of these products. After agreeing to remove products from the sensitive list, the countries must lower tariff on them between zero and five per cent. But the nations can charge tariffs — according to its need — to the products that are in the sensitive list.
Nepal had urged Bangladesh to remove 121 products, Pakistan 86 products, Sri Lanka 128 products, and Afghanistan 11 products from the sensitive list in March.
Earlier, during the 16th SAARC summit in 2010, the SAFTA Ministerial Council had reiterated commitment to implement SAFTA in letter and spirit. They had also emphasised the need to realise the full potential through reduction of the size of the sensitive lists, acceleration of trade facilitation measures, and removal of non-tariff, para-tariff and other barriers.
The regional trade block is an agreement reached on January 6, 2004 at the 12th SAARC summit in Islamabad, Pakistan to create a free trade area of 1.6 billion people in Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The seven foreign ministers of the region signed a framework agreement on SAFTA to reduce customs duties of all traded goods to zero by the year 2016.
The agreement came into effect on January 1, 2006 and is operational following the ratification of the agreement by the seven governments.
It requires the developing countries in South Asia — India, Pakistan and Sri Lanka — to bring their duties down to 20 per cent in the first phase of the two year period ending in 2007. In the final five year phase ending 2012, the 20 per cent duty will be reduced to zero in a series of annual cuts.
However, the Least Developed Countries — Nepal, Bhutan, Bangladesh and Maldives — have an additional three years to reduce tariffs to zero.
According to the World Bank, the region is the least integrated of global regions and barriers to trade and investment and movement of people are very high.
“Regional Cooperation can be a powerful tool for increasing growth, reducing the gap between leading and lagging regions, and reducing vulnerabilities for the poor,” it said, adding that regional integration and cooperation can be helpful in lowering income inequality by focusing on the income of the poor both through the growth mechanism and by reducing vulnerability.