The
most significant
aspect of the recent
SAARC Summit, according
to Professor Mustafizur
Rahman, Professor,
Dhaka University,
and Research Director,
Centre for Policy
Dialogue, is that
this time the leaders
have demonstrated
a strong willingness
to make some concrete
decisions to foster
and promote regional
cooperation among
the SAARC countries.
They have held talks
on regional connectivity,
food security, promotion
of investment, economic
integration, to
name only a few,
and have come up
with concrete "doables"
in each of the identified
areas.
Many critics tend
to argue that unless
India and Pakistan,
the two giants in
the SAARC, are able
to put their differences
behind SAARC will
continue to remain
ineffective. On
the other hand,
the economist feels
that disputes between
Pakistan and India,
especially regarding
Kashmir, could hardly
be resolved through
the platform of
SAARC. "Those
are bi-lateral issues
and SAARC, by its
very charter, does
not discuss bi-lateral
issues. Nonetheless,
it can not be denied
that bi-lateral
issues were likely
to have impact on
multilateral negotiations
within the ambit
of SAARC."
It is encouraging
to note that some
positive developments
are already visible
in the relationship
between India and
Pakistan, particularly
in terms of increased
movement of people
through bus and
train services;
besides, the situation
along the Line of
Control has seen
some improvements
in the recent past.
Rahman believes
progress in the
discussions between
the two nations
has had a positive
impact on the state
of understanding
among SAARC members.
"But I do not
think it will be
a good idea to bring
bi-lateral issues
on to the platform
of SAARC. This could
deflect us from
the task of identifying
modalities for cooperation
on a regional basis.
SAARC should be
more focused on
economic integration,
intra-regional trade
and investment flows
and on the issue
of establishing
better connectivity
embracing all member
countries."
On Trade
It was hoped that
SAFTA would take
off as of January
1, 2006. However,
there were formidable
challenges on the
way. One such challenge
was that Pakistan
was not ready to
provide most favoured
nation (MFN) status
to India. Then there
was the problem
of having a large
number of items
in the sensitive
list prepared by
all SAARC members.
For example, Bangladesh
had 1254 items and
India 884 items
in their respective
sensitive lists.
Moreover, there
are various quasi-tariff
and non-tariff barriers
that constrain easy
flow of tradable
goods across borders
in the region.
Intra-regional trade
between the SAARC
continues to be
very low, about
5% of the total
global trade of
the SAARC countries.
Bangladesh's trade
within the region-mostly
by way of import-was
however quite significant.
Fifteen percent
of all of Bangladesh's
import was sourced
from India, though
her intra-regional
export was negligible.
Bangladesh was interested
to export more to
the region since
this was how she
could reduce her
bilateral deficits
in trade with other
SAARC members, particularly
with India.
A welcome sign was
that the recent
Summit had taken
a number of decisions
to speed up the
implementation of
the SAFTA accord,
says Rahman. "For
example, India has
announced that it
would allow zero-tariff
access for the four
LDCs in the SAARC
for all items outside
of her sensitive
list. This was to
be made effective
by the end of 2007
although according
to the SAFTA provisions
this was supposed
to be done at a
later date [by end-December,
2008]. However,
the key to an effective
market access under
SAFTA was to reduce
the number of items
in the sensitive
list in a speedy
manner."
India, a country
with which Bangladesh
had a trade deficit
of about $1.6 in
FY2006 billion,
has a sensitive
list that includes
a number of products
in which Bangladesh
has evident export
interest. The most
notable item of
Bangladesh's export
interest in India's
sensitive list is
apparel, which constitutes
about 75% of Bangladesh's
global export. Leather
ceramic tableware,
plastic items and
cotton fabrics are
Bangladesh's other
exportables that
feature in India's
sensitive list.
What is encouraging,
however, is that
India has agreed
to provide market
access to Bangladesh
for 6 million pieces
of apparel at zero-tariff.
As a matter of fact,
India's Commerce
Minister, during
his recent visit
to Bangladesh, made
the generous offer
of importing another
2 million pieces
under the same market
access facility.
"India is ready
to provide zero-tariff
market access for
our apparel under
a quota but our
main interest is
to have apparel
and some of the
other items of our
export interest
to be brought out
of her sensitive
list. We would like
those items to be
provided zero-tariff
access to Indian
markets as early
as possible."
The economist is
hopeful that items
in India's sensitive
list will be pruned
in the near future.
However, Rahman
is doubtful as to
whether apparel
will be de-listed
any time soon. Rules
of Origin is also
an issue that he
feels requires careful
consideration.
A number of issues
tend to be bundled
under non-tariff
barriers (NTBs),
observes the professor.
"But some of
these issues including
quality standards,
laboratory testing,
and sanitary and
phytosanitary standards
are not NTBs in
the strictest sense
of the term. If
such requirements
were in line with
the national policies
in the areas of
quality control
and health-hygiene
concerns, an exporting
country would need
to comply with such
regulations set
by the importing
countries."
He suggests building
appropriate and
adequate capacity
in the BSTI to meet
those requirements
some of which are
rather stringent.
"At the same
time, Bangladesh
needs to sign a
memorandum of understanding
between Bureau of
Indian Standards
and Bangladesh's
BSTI that would
allow for mutual
recognition of quality
standards. This
could pave the way
for enhanced trade
between the two
countries."
On non-tariff barriers
such as anti-dumping
duties and technical
barriers to trade,
Rahman holds the
view that Bangladesh
and India would
need to resolve
these issues through
discussions and
negotiations. A
committee of experts
has already been
set up for the purpose,
which is looking
into the relevant
issues. "The
committee should
complete their task
quickly and identify
all types of real
and perceived NTBs,
with a view to addressing
the attendant issues
speedily. The decision
at the Fourteenth
Summit as regards
establishment of
the SAARC Standards
Coordination Board
was definitely a
step forward in
this regard."
From current and
static perspectives,
Rahman admits, SAFTA
itself could not
perhaps generate
significant economic
opportunities for
Bangladesh. This
is mainly because
Bangladesh at present
has a highly limited
range of tradable
goods for export
to the region. But
the veteran economist
says, "Bangladesh's
narrow export basket
was not only an
issue of concern
in terms of trade
with India or SAARC
but with other countries
as well. We receive
zero tariff access
from the European
Union and from Canada,
but 75% to 80% of
our exports to these
destinations are
only apparel. However,
at eight-digit level
there are thousands
of other commodities
that are traded
globally but are
not exported by
Bangladesh. The
task before us is
to negotiate market
access for as many
items as possible,
which is important;
however, the more
urgent task is to
diversify our export
base by building
our supply side
capacities, and
to be able to raise
our competitive
strength."
