South Asian ministers fail to resolve Indo-Pak tariff row

BANGLADESH: India accused Pakistan of jeopardising a fledgling South Asian free trade deal by failing to fully implement key tariff cuts as a regional ministerial meeting wound up in Dhaka on Wednesday.

India said that a Pakistani move to limit tariff concessions for Indian goods was a breach of the trade deal as ministers at the two-day session decided to refer the dispute to a meeting of trade ministers later.

"When you enter into a contract, there's an obligation," India's state minister for external affairs E. Ahamed told reporters in Dhaka.

But the Pakistani move "was a negation of the contract," he said, adding "it will affect the entire SAARC process in future."

"It questions the future of the agreement," added Indian foreign secretary Shyam Saran.

The Indian officials' comments came at the close of the meeting of SAARC, or South Asian Association for Regional Cooperation.

He said that the row had been referred to SAARC trade ministers by "consensus."

When a country "deviates from the agreement and is not fulfilling obligations it ought to fulfill, naturally it is a matter to be resolved by the SAARC Council of Commerce Ministers," Ahamed said.

The row arose after the agreement went into effect July 1 following four years of negotiations aimed at creating the world's biggest free trade zone covering 1.4 billion people.

Pakistan Foreign Minister Khurshid Mahmud Kasuri did not reply directly to India's charges that it had not implemented the provisions of the free trade deal.

Kasuri told reporters that his government has conferred "Most Favoured Nation (MFN) Plus" status on India.

"When we say it is MFN PLus ... it is because the tariff is lower in the case of SAARC countries and that includes India," he said.

He said Islamabad reduced tariffs on 90 per cent of the goods India exports to Pakistan and the recent tariff reductions had boosted Indian export growth to Pakistan by as much as 300 to 400 per cent.

"Deeds are louder than words," he said.

However, Ahamad contested his figures, saying "that's not correct according to me." He did not give alternative

The meeting decided to declare South Korea, the United States and the European Union SAARC "observers," joining China and Japan who already have that status.

Dhaka, Thursday, AFP