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SAFTA in place but not for Indo-Pak. trade

Nirupama Subramanian

Talks on trade to continue

ISLAMABAD: The South Asian Free Trade Agreement (SAFTA) is to take effect from Saturday for South Asian Association for Regional Cooperation (SAARC) member-countries but Pakistan said its trade with India would remain outside the accord.

Trade between the two biggest SAARC countries will continue to operate under the existing regime, which means Pakistan will maintain a "positive" list of 773 items for import instead of the more open policy of a negative list. Ministry officials unwilling to be quoted say trade with India will continue to be guided by the positive list.

Pakistan will reduce tariffs in line with SAFTA requirements only on goods in its positive list.

Pakistan ratified SAFTA in mid-February 2006 — it was due to come into effect on January 1, 2006 — raising hopes that trade barriers between it and India might soon come down.

Hopes raised

With SAFTA making the Most Favoured Nation treatment automatic, there were also hopes that Pakistan's refusal to give India MFN would cease to matter. India gave Pakistan the MFN status in 1995-1996.

But in an interview to a newspaper soon after the February 15 ratification, Pakistan's Commerce Minister Humayun Akthar Khan said full-fledged commercial relations between the two countries would have to wait for the resolution of the Kashmir issue. Until then, bilateral trade would continue to be guided by the positive list.

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