ISLAMABAD : Ending weeks of suspense, Pakistan on Tuesday announced that it would extend the South Asian Free Trade Agreement (SAFTA), to be operationalised from July 1, 2006, to India.

The clarification came from Pakistan Commerce Secretary Syed Asif Shah at a joint news conference he addressed along with Commerce Secretary S.N. Menon on the opening day of bilateral talks on commercial cooperation.

Intense speculation

Whether Pakistan would trade with India under the SAFTA regime has been a subject of intense speculation ever since Pakistan Commerce Minister Humayun Akthar Khan in an interview to a local English daily said that trade between the two would continue to be guided by bilateral pacts.

In response to a question on the reported remarks of the Minister, Syed Shah said that he was not aware of them.

"SAFTA is a multilateral agreement valid for the whole of South Asia and Pakistan is a signatory to it. How can we exempt any country in the region from its purview?" he asked.

The stand taken by Syed Shah assumes importance as India-Pakistan trade is governed by what is known as the `positive list.' While India has conferred the Most Favoured Nation (MFN) status on Pakistan for the purposes of trade, the latter has refused to reciprocate on the plea that pending resolution of political issues such as Kashmir, full-fledged commercial cooperation was not feasible.

The "positive list" connotes the list of commodities, permitted to be imported from India. At the moment Pakistan allows import of only 777 items from India. New Delhi has sought inclusion of 286 more items.

However, with the implementation of SAFTA, the "positive list" would almost become irrelevant. Technically over 5,000 commodities could come under its purview. Like India, Pakistan could only put 20 per cent of the commodities in the negative list.

Mr. Menon said both sides took note of the decision of SAARC countries to ratify SAFTA and felt implementation of the Treaty would boost trade.

According to sources, the Indian delegation raised the issue of SAFTA in the context of the statement attributed to the Pakistan Commerce Minister.

The Pakistan delegation reportedly maintained that while it was committed to implementation of the Treaty, it would go about it "slowly and gradually."

Syed Shah said the meeting discussed the proposal for import of tea from India as well as enhancement of trade between the two countries through rail and sea.

It was decided that a meeting of officials from both sides would meet shortly at Wagah for an assessment of the infrastructure for the purpose of transit trade to Afghanistan.

He said a sub-committee has been constituted for joint registration of basmati rice. Soon both sides expect some of the banks to open their branches in each other's countries.

Railway officials from both countries are to meet to discuss a host of issues related to freight traffic.

Very important

Mr. Menon termed the deliberations of the Joint Study Group on trade as well the first day of bilateral talks on commercial cooperation as "very important in many ways."

He said that for the first time both sides have been able to devote attention to specifics.

"We were happy to see participation of technical experts in such a large number from the Pakistani side for the first time," he said.

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