Draft of 2 trade accords for SAARC finalized

SAARC officials have so far finalized two draft agreements concerning customs management and avoidance of double taxation, while negotiations are underway on two more deals expected to be signed at the 13th SAARC Summit here next month, local press reported Monday.

The Daily Star quoted a senior Foreign Ministry official as saying on Monday that the negotiations on protection and promotion of investment, and SAARC (South Asian Association for Regional Cooperation) arbitration center are yet to be wrapped up.

Meanwhile, the Committee of Experts on SAFTA (South Asia Free Trade Area) that had a meeting in Kathmandu on Oct.18-19 has not yet reached a consensus on three points in the free trade deal: rules of origin, sensitive lists and revenue loss compensation for the least developed countries (LDCs) in the SAARC domain.

The negotiators could only arrive at a consensus on providing technical assistance to the LDCs in the SAARC -- Bangladesh, Bhutan and Nepal.

Although South Asian countries have made several attempts at enhancing trade in the region, trade within the countries continues to be abysmally low. Available evidence suggests that informal trade is rampant and if such trade is brought within the ambit of official trade, a significant increase could be witnessed,the daily reported.

According to the daily, total informal trade exceeds 3 billion US dollars, which is almost double the formal trade in the region.India's informal trade with Pakistan is almost 10 times that of formal trade, that with Nepal and Bangladesh is almost as large asformal trade, with Sri Lanka it is almost one-third of formal trade and that with Bhutan is three times as much as formal trade.

High tariffs and the presence of non-tariff barriers in the form of quantitative and other restrictions create a strong incentive to avoid formal channel of trade in the region. The unweighted tariff average was highest in India at 39 percent, followed by Pakistan (25 percent), Bangladesh (20 percent) and SriLanka (15 percent).

Further reduction of tariffs, improvements in the transacting environment of formal trade, simplification of existing complicated procedures, improving information dissemination, improving awareness and education levels etc. would lead to a decline in informal trade flows, the daily reported.

Source: Xinhua