Afsarul Arifeen and Md. Joynal Abdin
The Financial Express on June 3, 2009
THE South Asian Association for Regional Cooperation (SAARC) is mandated for poverty alleviation through trade and economic co-operation in the region. It did not gain momentum up to the desired level. Intra-SAARC trade remained low even after 23 years of SAARC’s inception. The foreign direct investment (FDI) among the SAARC region is very negligible. Intra-regional investment depends on the capability to pursue deep integration and economic connectivity.
Our previous efforts to boost intra-regional trade through South Asian Preferential Trade Arrangement (SAPTA) did not meet with success because of some factors like inter-country barriers to trade, rampant informal trade, high tariff, non-tariff barriers, absence of harmonisation of standards, non-simplification of customs clearance procedures, non-simplification of banking procedures, barriers to intra-SAARC investment and inadequate transport infrastructure.
Effective trade facilitation measures should be implemented as an obligation to ensure enabling trade policy and governance for smooth and speedy movement of goods across the borders.
We must activate the mandated agenda of South Asian Free Trade Agreement (SAFTA) in the face of the growing focus on bilateral free trade agreements among the SAARC member countries since bilateral free trade agreement provides a structured framework under which various issues such as rules of origin, harmonisation of HS Codes and technical standards, custom procedures and negative lists can be addressed with much higher degree of flexibility for the mutual benefit.
Here this writer would like to highlight some issues that need to be addressed properly for achieving effective trade facilitation measures in South Asia.
Visa regime: In order to ease cross-border movement of businessmen and for increasing business activities, the visa regime in South Asia needs to be more open. Restrictions for visas such as city specifications, police reporting, single entry and short-term visas hamper business development, so it should be removed.
The number of SAARC Visa Exemption stickers for the category of leading businessmen in the region needs to be enhanced for all SAARC countries on the recommendation of the SAARC Chamber of Commerce & Industry (SCCI).
Communication links: Effective communication links are prerequisite for regional integration, although we are well behind the expected scale. Deficiency in communications infrastructure and restrictive policies of the governments are hampering regional communication links. The region needs to improve its infrastructure and remove all its restrictive policies for enhancing communication network.
An ‘open sky’ policy should be adopted in South Asia for improving air connectivity between the SAARC countries. All kinds of telecommunications links should be uninterrupted and penetrable in the region. Cross-border free flow of information, free movement of journalists and media products including broadcasting of TV channels (government and privately owned) of all SAARC countries should be allowed.
Adequate infrastructure for transportation of goods is essentially needed. Weak infrastructure on land, sea and air links will lead to increased costs and delays in goods delivery.
Chambers of commerce and industries of these countries may be associated with upgrading the transport links among the countries.
Finalization and implementation of Regional Motor Vehicle Transport Agreement is urgently necessary for free movement of vehicles. It will save cost and time.
Technical Regulations and Standards: Member countries must harmonise technical barriers to trade (TBT) and Sanitary and Photosanitary Safeguard (SPS) measures to streamline flow of traded goods. In this connection, the SAARC/Regional Accreditation Body must be established.
Banking facilities are crucial to the smooth handling of business transactions and insurance is vital for risk management. Regional banking facilities should exist to expedite business transactions for increased business activity.
The customs and border officials should be more in number and trained so that they have the knowledge of agreements. It is essential to reduce the harassment faced by business people by the customs officials. The decisions made by the customs should be communicated promptly for ensuring smooth trading of goods.
The constraints at land border crossings would be significantly reduced, if protocols were established for unrestricted movement of cargo. Modernisation of ports is a priority for development.
Electronic Data Interchange facilities should be introduced at the land borders to computerise systems and issue documents immediately to save time and costs.
Import Licensing: Members must adopt and notify non-restrictive, locally administered, automatic and transparent import licensing procedures, at least, for the regional trade.
The agreement on SAFTA has a time-bound commitment for reducing tariffs, but has nothing specific to offer with regard to the other complements to facilitate trade, namely non-tariff barriers (NTBs) and para-tariffs.
SAARC members must adopt and notify non-restrictive, locally administered, automatic and transparent import licensing procedures at least for the regional trade by an end date.
The successful economic integration of the region can be achieved only through close government-private sector partnerships. The inter-governmental policy framework for expansion of trade and investment needs to be implemented. Trade reform and facilitation, market development, infrastructure development, enforcement of intellectual property rights (IPR) and conservation of environment require direct support and participation of the private sector. The private sector also has a critical role to play under SAFTA in several areas:
a) Certification and management of rules of origin;
b) Identification of non-tariff and para-tariff barriers;
c) Preparation of negative list;
d) Monitoring of the free trade agreement (FTA);
e) Imposition of anti-dumping, safeguard and countervailing duties; and
f) Dispute settlement procedures.
The SCCI has been trying to bring the South Asian states together on different issues through regular programmes. It has also been working on harmonisation of standards and promotion of investments. Through Tourism Council, Women Entrepreneurs Council, Construction Council, Tea Council and ICT Council, the SCCI has been trying to bring the South Asian private sectors together and enhance cooperation in these important areas.
There were six task forces set up between Federation of the Bangladesh Chambers of Commerce & Industry (FBCCI) and Federation of Indian Chambers of Commerce & Industry (FICCI). The Six areas are; bilateral trade, raising Indian investment in Bangladesh, trade related infrastructure, removal of trade disputes, NTBs and activating programmes of Bangladesh-India Chamber of Commerce & Industry. Six task forces are working on these areas and make recommendations. Bangladesh-Pakistan Joint Business Council meetings are frequently held in every year.
In order to ensure that all the countries involved benefit from closer cooperation, attention needs to be given to more balanced trade flows among these countries based on the development of greater complementary among their economies. Increasing joint ventures among the entrepreneurs of these countries can help achieve this objective. In this respect, there is an immediate need for private and public sector collaboration within a multilateral framework.