The Hindu : FIEO says SAFTA is a `giant step forward'

Online edition of India's National Newspaper
Wednesday, Jan 07, 2004

Business

Business

FIEO says SAFTA is a `giant step forward'

By Our Special Correspondent

NEW DELHI JAN. 6. Describing the signing of the framework agreement on the South Asian Free Trade Area (SAFTA) in Islamabad as a `giant step forward' for the region, the Federation of Indian Export Organisations (FIEO) today said it would bring about a huge resurgence in trade and economic cooperation among the SAARC nations.

In a statement issued here today, the FIEO commended the statesmanship that led to the signing of the agreement and said other logical steps should be formation of a customs union and finally an economic union. It said there was every likelihood of trade rising several fold as a result of the agreement compared to the existing 4-5 per cent. The present trade data are no indication of the potential, it pointed out as Pakistan only allows 680 items for imports from India, many of which neither have real export potential nor fall in the main basket of exports from this country.

According to FIEO estimates, the formal trade between the two countries is about $250 million while informal and indirect trade — via Dubai, Singapore and cross-border smuggling — amounts to over one billion dollar. If import and export curbs are removed and transport links restored, it felt that trade could rise to as much as over $4 billion in two or three years.

This would be mainly in sugar, plastics and linoleum products, oil meal, rubber manufactured products, pharmaceuticals, tea, cotton, coffee and iron ore. In addition, services such as health, education, tourism, and entertainment could make a major breakthrough if the visa and travel regime is relaxed.

The FIEO said with the progressive implementation of SAFTA from 2006, a substantial part of the indirect trade going on among some of the countries would move to direct official channels, besides leading to substantial savings by way of freight and other costs.

Stressing that SAFTA would "inevitably'' lead to sharing of each other's strength for mutual benefit, the FIEO said it would result in generation of huge incomes and upgradation of the quality of life in the (SAARC) region.

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