Presentation onEconomic Cooperation under SAARC

Economic, Trade and Finance DivisionSAARC Secretariat, Kathmandu, Nepal.

E-mail: dirind@saarc-sec.org23 August 2015

Facilitating Trade under SAARCSAARC Members are Afghanistan,

Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.

Five Member States belong to the category of Least Developed Countries i.e. Afghanistan, Bangladesh, Bhutan, Maldives and Nepal (Afghanistan joined in 2007)

SAARC was established on 8 December 1985 with the signing of SAARC Charter by the SAARC Leaders at the First SAARC Summit held in Dhaka, Bangladesh.

SAPTA and SAFTASAPTA or SAARC Preferential Trading Arrangement was signed during Seventh SAARC Summit in Bangladesh on 11 April 1993.

SAFTA or South Asian Free Trade Area was signed during Twelfth SAARC Summit in Pakistan on 6th January 2004

SATIS or SAARC Agreement on Trade in Services was signed during 16th SAARC Summit in Bhutan on 29 April 2010.

SAPTA SAARC Preferential Trading Arrangement was signed during Seventh SAARC Summit, Dhaka, Bangladesh on 11 April 1993.Four Round of Trade Negotiations under SAPTA were conducted. It was based on positive list approachThe operationalisation of SAPTA was notified to WTO on 25 April 1997 under Enabling Clause.SAPTA covered limited number of products.

SAFTASAFTA Agreement was signed on 6 January 2004 .After ratification by all Member States, it entered into force with effect from 1 January 2006.After issuance of customs notifications by all Member States, the Trade Liberalisation Programme under SAFTA commenced w.e.f. 1 July 2006

SAFTAIt is based on negative or sensitive list approach. Effort is to reduce the sensitive lists to the minimum, especially by NLDCs for the export products of LDCs.India has only 25 tariff lines in its sensitive lists for LDCs. These include tobacco and whisky.

SAFTASensitive Lists of Bhutan and Maldives contain only about 150 tariff lines. The third phase of reduction in the Sensitive Lists is currently underway.

SAFTASAFTA Rules of Origin

a. Single Contracting State Content [Rule 8 (a)]b. Product Specific Rules (PSRs) [Rule 8 (b)]c. Regional Cumulation (Rule 9)d. Special Treatment to LDCs and Sri Lanka (Rule 10)

SAFTA

Intra-SAARC Trade Flows under SAFTA have been witnessing upward trend since launching of TLP in July 2006. Still it is much below the expected levels and much below the existing regional trade taking place currently among the Member States

SAFTAEfforts are on to bring intra-SAARC trade taking place under the bilateral trade regimes of Member States under the umbrella of SAFTA. For this purpose, a Study has been conducted with the assistance of Asian Development bank which is now in the implementation stage.

SAFTA

SAFTA was notified to WTO under Enabling Clause on 21 April 2008.

All Member States are individually forwarding their data on intra-SAARC trade flows under SAFTA to WTO. They are also send their data to the SAARC Secretariat twice a year

Afghanistan Exports under SAFTA (US$)

Year Exports under SAFTA

2011 (w.e.f. 28 Sept 2011) 14,770,442.10

2012 138,020,780.00

2013 155,747,730.00

2014 201,381,838.00

2015 (upto 30 June 2015) 95,103,708.35

Total 605,024,498.45

Trade Faciliation

For smooth flow of trade in goods, it is essential to facilitate trade. For this purpose several initiatives are being taken by SAARC which include harmonisation of standards, harmonisation of customs documents and customs procedures.

Trade FaciliationFacilitating transit and transportation of goods; and movement of people, particularly businessmen across the borders; removal of Non-Tariff Barriers and Para-Tariff Barriers; settlement of disputes; promoting intra-regional trade, inter-alia, by organizing events such as Trade Fairs and Trade Exhibitions.

Trade Facilitation - Customs

In the area of Customs, a SAARC Group on Customs Cooperation has been established at the level of Heads of Customs Organisations of Member States. A Sub-Group on Customs Cooperation has also been established at the functional level.

Trade Facilitation - Customs

Work at hand:Harmonisation of Customs DocumentationCustoms Procedures8-digit Tariff Lines of Member States

Trade Facilitation - Customs

Inter-operability of Systems being followed by customs administrations;Preparation of a simplified form for Customs Declaration for trade in goods in the SAARC region; and Capacity Building.

Trade Facilitation - Customs

The Ninth Meeting of the Sub-Group on Customs Cooperation was held in Colombo in June 2013 to discuss above issues.A SAARC Agreement on Mutual Administrative Assistance in Customs Matters has been signed and is already in force.

Trade Facilitation - Customs

To help the SAARC process, a Consultant was appointed to conduct a Study on Role and Scope of Customs in Trade Facilitation. The recommendations of the Consultant were considered by the Group on Customs Cooperation.

Trade Facilitation - Standards

SARSO or South Asian Regional Standards Organisation has been established in Dhaka, Bangladesh. Three Meetings of the Governing Board of SARSO have been held.Dr. Humayun Kabir has been appointed as the First Director General of SARSO

Trade Facilitation - Standards

SARSO Governing Board is assisted by:Technical Management Board (TMB); andSectoral Technical Committees for harmonisation of standards

Trade Facilitation - Standards

Six Sectoral Technical Committees:  

(i) Food and Agricultural Products(ii)Electrical, Electronics, Telecoms

and IT(iii)Jute, Textiles & Leather(iv)Building Materials (iv)Chemical and Chemical Products(v)Conformity Assessment

Harmonization of Standards of Identified Products

1. Refined Sugar2. Biscuits3. Instant Noodles4. Black tea5. Banaspati (veg. ghee)6. Skimmed Milk Powder7. Standard for food Hygienic condition8. Steel tube for Structural purposes9. Ordinary Portland Cement10. Steel Bars for Ceramic Reinforcement11. Ceramic Tiles

12. Identified Hessian and Tarpaulin fabric13. Jute Bags for packing of various commodities14. Jute twine15. Jute Carpet backing Fabric16. Jute yarn17. Cotton Drill Fabric18. Cotton Twill Fabric19. Towels and Toweling Fabric20. Electric cable21. Double capped fluorescent Lamp22. Shampoo and 23. Toilet soap

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   • SAARC Agreement on Multilateral Arrangement

on Recognition of Conformity Assessment; and

• SAARC Agreement on Harmonisation of Regional Standards

signed during the Seventeenth SAARC Summit held in the Maldives on 10-11 November 2011 have been already ratified byall Member States except Nepal

SAARC Agreements on

Conformity Assessment and Regional Standards

Trade Facilitation - Standards

In respect of some of the products, the work on harmonisation of standards is in advance stages. Draft SAARC Standards on some of the products have already been finalised by SARSO.

SAFTA Ministerial Council

The Eighth Meeting of SAFTA Ministerial Council held in Thimphu on 24 July 2014 reviewed the progress with regard to progress towards regional economic integration and urged all concerned SAARC mechanisms for expeditious action towards the implementation of mandates of higher SAARC bodies. The Ninth Meeting of SAFTA Ministerial Council is scheduled to be held in Afghanistan on 13 October 2015 preceded by the Tenth Meeting of the SAFTA Committee of Experts on 11-12 October 2015

SAARC STUDIES Study on the Regional Economic Integration in SAARC, its current extent and recommendations for further deepening Study on codification of variations in the level of development of Capital Markets in SAARC Member States Study on “Development of Institutional Framework for Data Collection on Trade in Services, including Capacity Building”Study on Development of web-based, user-protected interface and institution of a designated Statistics Cell at Secretariat for coordinating all statistical data or requirements thereof.Study on Regional Economic Integration (Second Phase)Study on “Development of a Regional Coordinated Surveillance Mechanism”Study on SAARCSTAT Web Portal

Questions, if any, are welcome.

Thank you for your attention !