SAFTA has potential to establish regional bloc - Gilani

Pakistani Prime Minister Syed Yusuf Raza Gilani on Thursday said that South Asian Free Trade Area (SAFTA) has the potential to establish a regional bloc with collective goals, and diversified abilities and potential as well as accelerate trade among the member countries.

"I see SAFTA not only as a regional bloc but also as a union of regional countries with collective goals, common objectives and diversified abilities and potential", he said.

"Let us harness this diversity into unity and create an enabling environment to put our respective countries on the road of economic development by increased mutual trade and investment," Gilani said while addressing the SAARC (South Asian Association of Regional Countries) Commerce Ministers at PM House in Pakistan.

The Prime Minister recalled and termed the signing of the Agreement on South Asian Free Trade Area in January 2006 as a momentous event in the history of SAARC and said, "We have undertaken an initiative, which, I believe, can open up a huge opportunity for achieving much greater economic integration among countries of the region." "Regional economic integration, in my view, is the most viable mechanism in the contemporary world," he added.

The Prime Minister said in today's world every country is struggling to transform the emerging challenges of globalization into opportunities for fostering development and economic prosperity.

"Regional trading arrangements are seen as an effective regime to encounter the global challenges through greater economic cooperation and engagement. The emergence of regional groupings across the world in recent times clearly demonstrates the need for forging deeper integration in our region," he added.

The Prime Minister said it was now widely recognized that regional trade agreements can complement the broader objectives of multilateral trade liberalization processes. He said a vast majority of existing regional agreements are established among geographical neighbours, as in the case of SAFTA, adding, this is because such proximity provides inherent advantages in terms of greater and faster integration.

"SAFTA has also provided us with an enabling institutional framework to increase the existing low levels of intra-SAARC trade - around five percent in comparison to the trade share of the regional trade of the European Union at 67 percent, the North American Free Trade Agreement (NAFTA) at 62 percent and the Association of Southeast Asian Nations (ASEAN) at 26 percent," he added.

The Prime Minister said the potential benefits of a successful free trade agreement are multiple, and will not be restricted to increased trade alone.

"In fact it is not an exaggeration that the achievement of the core objectives of SAARC itself - economic growth, social progress and cultural development including the promotion of the welfare of the people of South Asia, will depend, to a great extent, on the economic and other benefits that will result from implementation of SAFTA.

It is, therefore, imperative that we build on the momentum by implementing decisions taken by bodies formed under SAFTA," he stressed.

The Prime Minister said the establishment of South Asian Free Trade Area depends critically on the ongoing negotiations, adding, there are several vital issues that are to be successfully negotiated within the specified time-frame. "As per Trade Liberalization Programme under SAFTA, the Non-LDCs (Sri Lanka, India and Pakistan) would reduce their tariff to 0.5% by 2013, whereas the LDCs (Least Developed Countries) would reduce tariff to 0.5% by 2016," he said, adding, "the SAFTA tariff Liberalization Programme also

allows the member states to retain "Sensitive Lists" that are not offered for concessional treatment." The Prime Minister said, "We know that India has two separate Sensitive Lists one for NLDCs and other for LDCs.

Since India, Pakistan and Sri Lanka are NLDCs in the region, this makes Indian Sensitive List Pakistan-specific. The Indian Sensitive List for NLDCs has 861 but for LDCs it has only 25 items," he added. Gilani said, "We are also cognizant of the fact that the WTO trading arrangement is based on the principle of MFN, which implies non-discriminatory treatment among the member countries in terms of tariff as well as the number of tariff lines traded between the countries," adding, Pakistan being the signatory to WTO is obliged to observe this principle.

"I recognize that the outstanding issues of negotiation are quite complicated and it is not easy to find a common ground for all negotiating parties. Despite such difficulties, we have got to work hard and work in a spirit of goodwill and accommodation, keeping in mind the time limit and

the urgency of deepening economic integration in our region. I have full confidence in you and firmly believe that you would be able to conclude the negotiations successfully," he added. The Prime Minister, however, added that "On behalf of the government of

Pakistan, I assure you of our fullest cooperation in our collective march towards prosperity and peace in the region". Earlier Commerce Minister, Makhdoom Amin Fahim, in his address said that the major aim of the forum was to promote economic cooperation between the member states.

He said that Prime Minister of Pakistan has declared the year 2012 as year of regional trade and economic connectivity. In his remarks, the Secretary Commerce said that South Asia was the least integrated region in the world in terms of regional trade, while NAFTA, EU and ASEAN countries had a thriving trade among their members.

Present on the occasion were Sri Lankan Commerce Minister A Rishad Bathiudeen, Bangladeshi Commerce Minister Ghulam Muhammad Quader, Bhutani Economic AffairsMinister Lyonpo Khandu Wangehuk, Indiaan Commerce Minister Anand Sharma, Nepali Industry and Commerce Minister Lekh Raj Bhutta, Maldivian Economic Development Minister Aminath Shausan and Director General Commerce and Industries, Mozammil Shinwari. Minister for Commerce, Makhdoom Amin Faheem, Minister for Defence

Production and Industries, Ch Pervez Elahi, Advisor to PM on Finance, Dr Abdul Hafeez Shaikh and other senior officials of the relevant ministries represented the Pakistani side. (APP)