After committing to embark on smooth implementation of South Asia Free Trade Area (SAFTA), the South Asian Association for Regional Cooperation (SAARC) members are mulling to include trade in services under the region's free trade framework, an official at Nepali Ministry of Industry, Commerce and Supplies (MoICS) said here Sunday.

According to the official, the SAFTA Ministerial Council -- a body of SAARC commerce ministers -- has assigned its technical hand, Committee of Experts (CoE), which looks after SAFTA affairs, to examine the proposal of including trade in services in the agreement.

"The CoE has been mandated to decide over the possibility of including trade in services under the regional free trade arrangement," he said on condition of anonymity.

He added that the CoE will commence exercises in this front from October.

The dialogue on possible inclusion of trade in services under the SAFTA was taken up during the meeting of the SAFTA Ministerial Council -- the body of SAARC commerce ministers, held in Dhaka last month.

"In a bid to expedite the process, the Ministerial Council also entrusted a study in this regard with categorical recommendations on possibility of including trade in services, to Research Institute of India," the official stated.

The institute has been asked to submit its report prior to the next CoE meeting, which has been scheduled for October this year.

"Once the institute submits its report to the CoE, the committee will start discussions on new avenues to integrating the regional economy," the source stated.

According to the official, the SAFTA agreement so far covers only trade in goods. It came into force from Jan. 1, 2006. Nepal, India, Bangladesh, Sri Lanka, Pakistan, Bhutan and the Maldives are the contracting states of SAFTA.

As per the agreed tariff liberalization plan, India, Bangladesh, Sri Lanka, Pakistan, Bhutan and the Maldives need to start tariff reductions from July 1 this year, while Nepal needs to do so from Aug. 1.

Under the plan, the member states are required to reduce their tariff in two phases. In the first phase, Pakistan and India need to reduce their tariffs to 0 to 5 percent within seven years (by 2013), Sri Lanka within eight years (by 2014) and the four Least Developed Countries (LDCs) within 10 years (by 2016).

Pakistan, India and Sri Lanka, however, need to complete their Trade Liberalization Program for the LDCs within three years (by 2009).

"Besides working on inclusion of services trade among the contracting states, the SAFTA Ministerial Council also asked the CoE to identify non-tariff and para-tariff barriers that hinder trade within the bloc, and chalk out measures for their removal," the official stated.

Source: Xinhua