The Telegraph
Since 1st March, 1999
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Pak hems and haws on trade pact

New Delhi, Sept. 1: Pakistan has asked for deferring the forthcoming meeting of the South Asian Preferential Trade Agreement in Islamabad, which could lead to the South Asian Association for Regional Cooperation’s goal of finalising the agreement on a free-trade area in South Asia by the year-end.

Pakistan, which is now looking for ways of delaying the trade agreement from coming into force, has often in the past blamed India for the slow progress of putting in place a free trade regime in South Asia. The preferential trade agreement is the precursor to bring in a free trade area in the region.

India, on its part, has made it clear that it would not allow strained Indo-Pak relations to hamper the progress of Saarc. To ensure this, foreign minister Yashwant Sinha has announced that India will participate in January’s Saarc summit in Islamabad. Delhi had also agreed to send an official delegation to participate in next month’s meeting in the Pakistani capital.

At the Saarc foreign ministerial meeting in Kathmandu last week, member nations had emphasised that economic cooperation should be the foundation for taking the regional grouping forward. In this regard, they had agreed that final negotiations on the preferential trade agreement and the South Asian Free Trade Agreement should be completed by the year-end.

However, if next month’s meeting is postponed, it would delay the entire process and there is little possibility that negotiations on the free trade agreement could be completed by this year-end.

One reason why Pakistan has asked for deferring the preferential trade meeting could be its keenness to put in place a Free Trade Agreement with Sri Lanka — the other country in the region, apart from India, with an attractive market and economy.

An attempt was made during President Pervez Musharraf's visit to Sri Lanka in early July to sign the agreement with Colombo. However, because of time constraints it could not take place.

Once the preferential trade agreement comes into force, all members, including India and Pakistan, will have to give preferential trade arrangements to each other. This may not be a problem for India as it has already given the most-favoured-nation status to Pakistan as part of its World Trade Organisation obligations. However, Pakistan, though a signatory of the WTO, has so far withheld the status to India.

The Pakistani leadership has been arguing that its trade and economic relations with India cannot be normalised unless the two sides resolve the decade-old Kashmir dispute. There is a feeling in South Block that even if the preferential trade agreement comes into force, Pakistan may continue to use the same argument in keeping the preferential treatment to India in abeyance.

On the other hand, to ensure that its trade does not suffer more than what it already has because of strained relations with India, the Pakistani leadership is keen on an early completion of the agreement with Sri Lanka.

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