Report

198 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA
accorded to LDC members and liberalisation of tariffs
by the developing countries in three years, the TLP is
for bringing the duties to 0–5%. There is no such
commitment to grant duty-free treatment to LDCs at
the end of TLP. At the 14th SAARC Summit, the Prime
Minister of India stated that as the largest country in
the region, India was ready to accept asymmetrical
responsibilities including opening her markets to her
South Asian neighbours without insisting on reciprocity.
He also announced that before the end of the current
year, India would allow the LDCs among its South
Asian neighbours duty-free access to its markets (in
SAFTA Agreement the commitment is for bringing the
duties to 0–5%. It will also further reduce the sensitive
list in respect of these countries. As per this announcement,
India has eliminated its tariffs to zero (duty-free)
for the LDC members with effect from 1 January 2008
whereas as per the SAFTA tariff liberalisation programme,
the reduction to 0–5% for the LDCs was to
be completed by 31 December 2008. India is also in
the process of unilaterally reducing its Sensitive List
for LDCs. It is important that other developing
members like Pakistan and Sri Lanka announce for
providing a duty-free market access to LDC members
for non-sensitive items. Secondly, the SAARC LDCs
also do not compete with each other in their respective
markets and therefore, even the LDCs should decide
for grant of duty-free market access to each other at
the end of the TLP. Lastly, for the LDCs a fasttrack
mechanism for providing technical assistance, capacity
building, providing equivalence, MRAs and
accreditation for facilitating their export items would
need to be evolved.
Business to Business Interactions
There is a SAARC chamber of commerce which aims
for enhancing business to business interactions.
However, given the fact that the intra-regional investment
flows are miniscule, there is a need that this
activity is given more focused attention and an institutional
arrangement is built which provides that in the
process of policy making, suggestions made by the
SAARC chamber are accommodated by each member.
Line of Credit
Given the success of the Line of Credit that India has
opened with Sri Lanka and its positive effect on trade
and investment flows, one of the actions that can be
recommended is to replicate the same with other
members. Perhaps India can take a lead in this, as it is
the biggest partner of SAARC. In this regard, priority
should be given to LDCs which have weak purchasing
power and have limited financial resources.
Apart from the above action points, it would also
be necessary that future research areas are identified
well in advance, In this regard, the following areas for
research can be recommended:
• With the growth of regional trade agreements
worldwide as well as in Asia, a study on impact of
such RTAs on SAFTA needs to be carried out. What
would be the impact of overlapping agreements on
intra-regional trade, and how the different RoOs
will impact the trade and investment flows in the
region needs further probing.
• The intra-regional investment flows have also been
much skewed. A study on compiling data of the
actual investment flows; impediments to investments;
and suggestions to increase intra-regional
investments needs to be carried out. The study
should also suggest incentives or policy instruments
that can be put in place to attract intra-regional
investments. Country specific recommendations
would be useful as there may be necessity to follow
different policy measures to attract investments.
• The impact of trade liberalisation on specific sectors
like textiles, food processing industries and some
of sectors of services can be carried out and
disseminated. What are the lessons to be learnt and
how SAARC members can benefit together needs
to be examined.
• A study should be carried out to identify the sectors
where the backward-forward linkages among the
industries can take place in the SAARC region. The
study should also recommend how this integration
can be made possible and what kind of policy
instruments need to be put in place by individual
SAARC members.
• Informal trade being very important segment in
SAARC, a field based survey needs to be carried
out to assess its actual potential. The study should
also make policy recommendations as to how they
can be converted to formal trade and highlight the
benefits that may be passed on to the members and
consumers.
• Food security in South Asia is a common cause of
concern, what role SAFTA can play needs a deeper
examination.
In order to make SAARC a meaningful coalition
and a strong economic block, substantial progress