Rishad is new SAFTA Chairperson!

Sri Lanka marked yet another milestone in its global trade on 23 August as it arrived at the very frontlines of the 1.6 Bn strong markets of emergent South Asian economic union. On 23 August, the country was unanimously elected by SAARC’s top trade decision makers, the SAFTA bloc, to lead them in their first ever open call for stronger private sector involvement in SAFTA’s otherwise state-to-state led intra-regional trade. “We congratulate Sri Lanka and we are confident of successful outcomes in this meeting. I thank Sri Lanka (DoC) for the excellent arrangements made for us and for this SAFTA session. The government of Sri Lanka deserves profound appreciation for the warm hospitality extended to the visiting SAFTA delegates” announced an excited Ahmed Salem, Secretary General of SAARC on 23 August in Colombo, and added: “Trade under SAFTA has crossed $ 2.4Bn. Our request to “reduce sensitive list by at least 20% before the 17th SAARC summit”, must have contributed to trade growth in SAARC.”

Salem was addressing the inaugural event of the seventh SAFTA Ministerial Council meeting 2013 held at Cinnamon Grand Hotel, Colombo on 23 August. The SAFTA Ministerial Council Meeting remains the highest decision making body for the effective implementation and administration of the SAFTA concluded in 2004  which came into effect in 2006 in place of the SAPTA. It is estimated that the surging SAFTA market has a huge consumer headcount at 1.6 Bn, and therefore is ‘highly promising’. Chief amongst the SA markets are India (world’s second most populous nation, 192 Mn estimated households), Pakistan (world’s sixth most populous nation and second urbanised country in SA, with 28 Mn estimated households), and Bangladesh (world’s eighth most populous nation with 34 Mn estimated households).

All the delegates at 23 August Ministerial council meeting were united in their calls to exploit South Asia’s strong market potentials, calls for further trade liberalisation, expansion of trade integration across the region and to move forward in the on-going processes with regard to their respective sensitive lists-however the most important development being that for the first time, all members of the SAFTA bloc openly endorsed the role of private sector involvement in SAFTAs future direction.

During the 23 August session at Cinnamon Grand Colombo, visiting delegates of the SAFTA bloc elected Sri Lanka to Chair the SAFTA Ministerial Council till August 2014 after which Bhutan is scheduled to take over from Sri Lanka. Thus, by virtue of being the Minister of Industry and Commerce of Sri Lanka, Minister Bathiudeen becomes the new Chairperson of SAFTA till August 2014. Joining Minister of Industry and Commerce Rishad Bathiudeen -who officially represented Sri Lanka at SAFTA on 23 August at Colombo’s seventh Ministerial Council meeting-(with the exception of Afghanistan) were the visiting SAFTA representatives from Bhutan (Lyonpo Norbu Wangchuk-Minister of Economic Affairs of Bhutan with his officials),  Bangladesh (Ghulam Muhammed Quader-Minister of Commerce of Bangladesh with his officials), India (Arvind Mehta-Joint Secretary of Indian Department of Commerce with his officials),  Maldives (HE Hussain Shihab – High Commissioner of Maldives to Sri Lanka with Maldivian officials),  Nepal (Janardan Nepal – Secretary, Ministry of Commerce and Supplies of  Nepal with his officials), Pakistan (Qasim M. Niaz –Secretary, Pakistan Commerce, with his officials), and Ahmed Saleem (Secretary General – SAARC Secretariat, Kathmandu). The 23 August Ministerial session, was preceded by SAFTA Committee of Experts’ in-depth, face to face discussions that began two days earlier on 21 August at Cinnamon Grand, Colombo.

The Lankan team was on 23 August led by Minister Bathiudeen, consisted of Anura Siriwardena (Secretary, Ministry of Industry and Commerce), PD Fernando (Director General of Commerce), officials of his Ministry and officials from the Department of Commerce, among many others.

Lavishing praise for the Department of Commerce of Sri Lanka for its strenuous and singlehanded performance in successfully hosting and wrapping up the three day SAFTA sessions in Colombo, Secy. General Salem said: “We congratulate Sri Lanka and we are confident of successful outcomes in this meeting. I thank Sri Lanka (DoC) for the excellent arrangements made for us and for this SAFTA session. The government of Sri Lanka deserves profound appreciation for the warm hospitality extended to the visiting delegates.” Many other visiting SA delegates too, on different occasions, commended the Department of Commerce of Sri Lanka for SAFTA 2013’s success.

Secy. General Salem said: “The 2011 SAARC summit held in Maldives directed SAFTA Ministerial Council to reduce members’ sensitive lists, resolution of non-tariff barriers, harmonising standards and modernise custom standards. Trade under SAFTA has crossed $ 2.4Bn. Our request to “reduce sensitive list by at least 20% before the 17th SAARC summit”, must have contributed to trade growth in SAARC.  Within South Asia, much larger volumes of trade are taking place outside SAFTA!  These are mainly due to the bilateral trade agreements among members. One of the reasons for slow phase of SAFTA is the sensitive lists.”

Secy. General Salem added: “A number of suggestions have now been put forward to the Council to reduce hindrance to regional trade. To involve the private sector in the SAFTA process, representatives of SAARC Chamber of Commerce and Industry are invited to the special meeting of Committee of Experts on non-tariff and para-tariff measures to present their views and concerns. However SAARC is still often criticised ‘that much more can be done’. SAFTA regional trade is still low in comparison to ASEAN and NAFTA. One of the reasons cited is that number of items in region’s sensitive lists of member states are still high, such as agriculture commodities. I am happy to note that Phase II exercise to reduce sensitive list items and to liberalise trade have been undertaken by member states and two meetings in this regard have already been held.”

“Many pragmatic businessmen will agree with me that it is not the size or length of the negative lists that are negotiated that counts, but whether the products indicated therein are actually “exportable” without the obstruction of NTBs” said Rishad Baathiudeen, Minister of Industry and Commerce, addressing the event. Minister Bathiudeen then commended Sri Lanka’s Department of Commerce for its successful effort in singlehandedly hosting a three day South Asian event of such a scale in Colombo for the first time: “I praise my Department of Commerce for making this important three day regional event a reality.”

Minister Bathiudeen, who chaired and moderated the three hour long closed door session of the Ministerial Council on 23 August, said: “Measures to dismantle all barriers to trade under the South Asian Free Trade Area (SAFTA) Agreement are already underway. A Special Meeting on Non-tariff Measures (NTMs) and Para-tariff Measures (PTMs) was convened at the SAARC Secretariat in Kathmandu even last month. In keeping with the directive of SAARC Leaders to involve the participation of the private sector in decision making, the   representatives of the SAARC Chamber of Commerce and Industry (SCCI) were also present at the meeting. Subsequent work of the Committee on Experts have pursued  action to follow  the  objectives and concerns of the SAARC Leaders with regard to impediments posed to liberalised trade from non-tariff and para-tariff barriers. We stand today at the threshold of a great number of alternate strategies adopted in global trade among countries to increase their exports and draw FDI. The slowing down of the global economy, the dormancy of the Doha Round of Multilateral Trade Negotiations have propelled nations to increasing levels of regional and bilateral free trade agreements as well as to engage in comprehensive economic partnership arrangements. Emergence of successful Northern Trade Blocks as NAFTA (North Atlantic Free Trade Arrangement) and EU (European Union) have resulted in marginalization of the developing countries in global trade. Sri Lanka remains fully committed, confidant and  supportive of the  objectives of SAFTA  in further enhancing the programme of regional economic integration through promotion of preferential trade. Members will recall in this regard that  Sri Lanka was very closely involved with pioneering efforts of regional economic integration which began with the establishment of the South Asian Preferential Trading Arrangement (SAPTA) in 1995.”

Minister Bathiudeen added: “SAFTA is not merely South Asia’s response to the undeniable trend of regionalism. SAFTA is fundamentally important because it gives a cooperative framework for South Asian economic integration. This has undoubted benefits for the Region by way of pure economic gains in the form of efficient use of capital, labour, FDI and distribution of goods and services across borders. There could be strategic gains as SAFTA Members negotiate multilateral concessions in global fora as a unified group with common interest. Developmental and Environmental efficiency gains will arise when SAFTA members adopt a regionally integrated approach on provision of public goods. If we turn to look at actual performance, the intra-regional trade growth amongst SAARC countries has no doubt been rather modest. However the level of dependence on intra-regional trade amongst these countries varies and the estimations of informal intra-regional trade growth is also worthy of  significant consideration. We believe that together we can as a region address limiting factors that affect the SAFTA  in a cooperative spirit of mutual gain. We are encouraged by the positive developments that have occurred in the run up to this Seventh Council Meeting of the Ministers. Some commendable progress can be observed from the deliberations of the 5th and 6th SAFTA Ministerial Council Meetings held respectively in Maldives in 2011 and in Islamabad in 2012. Some of these progressive developments deserve brief mention so as to take stock of  where we stand today with the SAFTA process  while exploring further advances we can make at the 7th Session this week. It is perhaps our common experience that trade agreements that are concluded without adequate binding commitments to address issues of Non-Tariff Barriers are doomed. Many pragmatic businessmen will agree with me that it is not the size or length of the negative lists that are negotiated that counts, but whether the products indicated therein are actually “exportable” without the obstruction of NTBs. I am happy to state in this connection that we have secured a definite Plus with the SAFTA and its stand on NTBs. We must also note that the SAFTA has an important consultation and Dispute Settlement Mechanism in its framework. This is unparalleled in previous FTA’s concluded by countries and the lack of such mechanism had marred their success. The launching of a fresh round of negotiations for further reduction of the number of products in the Sensitive Lists under SAFTA has proceeded beyond the minimum requirement of 20%. I am happy to note that some members have proposed reductions more than the stipulated requirement. The placing of a ceiling on the Sensitive List of SAFTA is therefore a very important  development. The Trade Liberalising Programme (TLP) under SAFTA is progressing satisfactorily with widened scope including the Tariff reduction offers of Afghanistan. We are also pleased to witness the progress achieved since the Fifth Meeting of the Expert Group on SAARC Agreement on Trade in Services (SATIS). This has added an important and crucial dimension to the future direction and ambit of the SAFTA process which has become a more comprehensive tool of liberalisation compared to previous experience. I am confident that this new additional aspect of SAFTA relating to trade in services would foster a friendly climate for cross border investments. In making such concessions, we should strive to accommodate domestic policy concerns, asymmetries  and imperatives. It is in this way that we could reap economic benefits that are forged out of concessions that are exchanged in a mutually gainful manner complementing the comparative advantage of Member States. You would therefore agree that with the special positive features and impressive progress made so far, the SAFTA stands poised to actively contribute and encompass the process of political and economic integration and vision of an Asian Economic Community. Indeed with the momentum and strength of progression already achieved, SAFTA may well provide a crucial catalyst to the regional and bilateral processes as APTA, BIMSTEC, CEPAS, FTAs and other Look East initiatives already proliferating in the region.”