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Trade breaks free of Big Two bear hug

Islamabad, Jan. 6: Away from the blinding glare of the India-Pakistan diplomatic breakthrough, the Saarc members today signed an agreement to bring down the trade barriers in the region.

The South Asian Free Trade Area (Safta) framework treaty, inked by the foreign ministers of Saarc’s seven members, seeks to eliminate tariffs in phases.

The treaty will operationalise the free trade area by January 1, 2006, by when tariffs would be brought down to 20 per cent in non-least developed Saarc countries and 30 per cent in least developed countries (LDCs). The rates will be brought down further to 0 to 5 per cent in non-LDC countries in the subsequent five years and in LDCs in eight years.

The pact also has a provision to establish a ministerial mechanism for administering the treaty and dispute settlement among the members.

Pakistan Prime Minister Mir Zafarullah Khan Jamali said the Safta pact and other agreements concluded at the summit represented the collective resolution of member countries on the need for economic and social progress in the region.

“Saarc symbolises the aspiration of our people for peace and progress… of hopes for better future, festering of mutual understanding and good neighbourly relations,” Jamali said.

Khaleda Zia, the Prime Minister of Bangladesh, described the signing of the Safta treaty as an “historic development”, saying it would pave the way for accelerated regional cooperation.

“The document signed at Islamabad will constitute a building block on the way to achieving the Saarc objectives,” she said, referring to the Islamabad Declaration adopted by the summit.

The deal has been eluding the group for several years, mainly because Pakistan had linked a breakthrough to the resolution of the Kashmir issue. However, this time, Islamabad did not stand in the way.

CII said in Delhi that the agreement would help ensure economic integration among the Saarc nations. “We welcome the development that will surely increase trade among the South Asian countries who currently do not have very strong business relationship,” S. Sen, deputy director-general of the industry chamber, said.

The Islamabad Declaration reaffirmed the centrality of Saarc for promoting regional cooperation and emphasised the need to enhance its efficacy.

The Saarc leaders also renewed their commitment to the objectives, principles and provisions of the charter of the organisation. The charter had been a bone of contention with Pakistan feeling that it should be altered to include bilateral issues and India, certain that bilateral could only mean Kashmir, opposing it. But in the run-up to the Islamabad summit, Pakistan had made it clear that it would not force a discussion on the issue.

Though President Pervez Musharraf referred to the need to change the charter during a summit banquet speech, he clarified today that it was his “personal opinion”. Jamali, too, today ruled out the possibility of revising the charter, saying it is not possible until all member states agree to a change.

Jamali also hinted at a possible visit to all Saarc countries in the near future as chairman of the organisation but added that he does not plan to undertake a bilateral visit.

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