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Proposal to reduce SAFTA sensitive list to one hundred

DR. SUMAN KUMAR REGMI
Bhutan, Maldives, Pakistan and India had proposed that all SAARC member countries should bring down the goods under sensitive list to one hundred each and customs tariffs for regional products to a maximum of five percent by 2022.
Nepal being an import based country has been asking for a gradual reduction in its list. A meeting of the South Asian countries was held in March 2014. In this meeting the officials had discussed on marginal preferences and its product limit.
During the meeting of the SAFTA held on July 30, 2013, officials focused on the reduction of the number of products in the sensitive list. The progress made on the reduction of the number of products in the sensitive list of different countries were discussed. The sensitive list is a list that the member countries of the region have made which does not include tariff concession. Such meeting used to focus on the reduction of products in the sensitive lists based on percentage. It was informed that Sri Lanka had already finalized the sensitive list.
SAFTA meeting used to be postponed from time to time. Three SAFTA meetings had been postponed in the past. The special SAARC meeting of the Customs and Commerce Authorities on Verification relating to the Rules of Origin set, the third meeting of Working Group on Reduction in the sensitive lists and 11th Meeting of the Experts Group on SAARC Agreement on Trade and Services (SATIS) were scheduled to be organized under the SAFTA secretariat but all these meetings were postponed time and again. The 7th meeting of the SAFTA Committee of Experts held in Pakistan (Islamabad) on January 14-15, 2012, had decided to establish an ad-hoc working group on reduction in the sensitive lists under implementation of SAFTA. The first and second meetings of the working group were held in Nepal (Kathmandu) on 18 June 2012 and July 30, 2013.
In the SAFTA meeting in 2012, the working group on reduction in the sensitive lists under SAFTA had completed its task of reducing the sensitive list by 20 percent. Earlier, Maldives had reduced its sensitive list from 681 tariff lines to 152 tariff lines (78 percent reduction) and India had reduced its sensitive list for LDCs from the earlier 480 tariff lines to only 25 tariff lines (95 percent reduction).
The SAARC Committee of Experts (CoEs) had agreed to implement the South Asia Free Trade Area (SAFTA) agreement within the agreed time frame. The eighth round of SAFTA CoE meeting that had concluded on April 27, 2005 had agreed to enter into a regional FTA between the South Asian countries from January 2006. This meeting was successful in bringing consensus on issues like rules of origin, sensitive list, and technical assistance to least developed countries.
The number of products covered in the sensitive lists of the member states before and after the 20 percent or more reduction was as follows: Nepal – (LDCs), 1036 (NLDCs); India-25 (LDCS) , 695 (NLDCs); Bangladesh- 987(LDCs), (NLDCs); Bhutan -150?; Sri Lanka-845 (LDCs), 906 (NLDCs); Pakistan -936; Maldives – 152 and Afghanistan -850.
The South Asian countries after entering into SAFTA had been working on to open up their market to boost intra-regional trade but it used to take long. South Asian intraregional trade used to stand at a minimal volume due to various infrastructural, tariff and non tariff barriers
Countries in the South Asia region used to gear up to open their markets to regional member countries. One of the most poor regions in the world that houses some 1.5 billion people. South Asia is the least integrated region in the world due to poor logistics and trade barriers, despite its huge potential.
SAARC countries have put a total of 6,768 and 5,148 goods for non-least developed countries (NLDCs) and LDCs respectively inside the SAARC region under the sensitive lists.
The sensitive lists have included products on which huge customs tariffs are imposed by individual member countries so as to protect their domestic industries supplying similar products.
Though South Asian Free Trade Area (SAFTA) agreement envisages facilitating intra-regional trade by reducing tariffs and non tariffs barriers, member countries are still maintaining long lists of sensitive products with high customs duty.
SAARC member countries have been showing unwillingness to reduce the sensitive lists to protect domestic industries and put their customs revenue unharmed.
Bhutan, Maldives, Pakistan, and India had also proposed to bring down the existing import duties to 0-5 percent by 2022 to ensure greater modality of goods produced by member countries.
SAARC member countries had decided to reduce the number of goods in their sensitive list by 20 percent in the second phase a couple of years ago. Of the eight member countries Bhutan, India, Maldives, and Nepal had already provided the names of goods removed from the sensitive lists to the SAARC Secretariat. Afghanistan, Bangladesh, Pakistan, and Sri Lanka had not submitted list till June 26.
Nepal, which had longest list of goods among SAARC countries, had already put 998 and 1036 goods originating from sensitive lists of LDCs and NLDCs respectively. Before the reduction, Nepal had 1257 goods for LDCs and 1295 goods for NLDCs under its sensitive lists. Maldives had shortest-listed and included 154 goods in sensitive list. Similarly, Afghanistan and Bhutan had 850 and 156 goods in the list. But Pakistan had 936 goods under its sensitive list for both LDCS and NLDCs. Bangladesh had 987 and 992 in its list for LDCs and NLDCs. Whereas India had 25 goods for LDCs and 614 for NLDCs under the sensitive list. Similarly, Sri Lanka had 845 and 906 goods for LDCs and NLDCs respectively.

(The writer is the former deputy executive director of the Trade and Export Promotion Centre.)

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