Report

4 Effective Additional Market Access
under SAFTA: Countrywise Analysis
INTRODUCTION
To gauge the benefits of a regional trade agreement it
is essential to identify the effective additional market
access that it creates for its members. There is a catena
of unilateral, bilateral, regional and sub-global level
tariff concessions which operate between members of
SAFTA today. These include concessions related to the
Bangkok Agreement, GSTP, GSTP (LDC), the Indo-
Bhutan, Indo-Nepal, Indo-Lanka and Pakistan-Lanka
bilateral FTAs. Several more like the Bangladesh-
Pakistan FTA and BIMSTEC are at various stages of
negotiation. Given the history of multiplicity of agreements
in concessions between South Asian countries,
these concessions have to be considered to determine
the benefits that SAFTA offers over and above these.
In this context, this chapter tries to capture the
effective additional market access that is created as a
result of SAFTA for its various members. Two aspects
would determine the EAMA. The first would be the
sensitive list decided upon and the second would be
the identification of those non sensitive products for
which concessions are effectively provided. SAFTA
adopts a negative list approach to tariff liberalisation.
This implies that countries will liberalise tariffs in all
products, except those specified in negative lists (that
have been negotiated and agreed upon by all members).
This is as opposed to a positive list approach, like that
adopted in SAPTA, where countries liberalise tariffs
only in products that they specifically commit to, with
status quo maintained on all products not committed.
The contents of the Sensitive Lists scheduled by
countries play a defining role in the extent to which
the FTA will lead to Intra-SAFTA trade gains. The
negative list of SAFTA has been specified at the 6-digit
level. There are a total of 5224 lines at the 6-digit level
in the entire HS Code. If one were to look at the number
of items in the negative list as a measure of
restrictiveness, then even the country (Pakistan) with
the largest number of items (1,183) in the negative list,
would not appear to be restrictive since only 23% of
the total items in the HS Code would be excluded from
tariff liberalisation. This would however not be the
correct way of assessing the extent to which the negative
list affects trade gains. When global trade (export)
statistics are examined, it is seen that 80% of the world
trade takes place in only 950 HS 6-digit lines (18% of
all HS 6-digit products). 1 In the case of South Asia,
where exports are less diversified than the rest of the
world, 80% of South Asia’s global exports takes place
through only 368 HS 6-digit products (7% of the total
HS Code (7% of all HS 6-digit products)
Thus the extent of trade and trade potential items
in the negative lists of members are more important,
than the number of items. In order to assess the
implications of the negative lists of each of the countries,
the items were extracted from the notified sensitive
lists. 2 After taking into account errors in HS coding/
reporting, a revised table indicating the number of
products has been prepared. (see Table 4.1)
Even after the sensitive list is accounted for there is
a need to determine the products in which tariffs are
1
Based on 6-Digit HS Export Data from WITS/COMTRADE for year 2004.
2
It must be noted that the manner in which the negative lists have been notified (SAARC website), has room for considerable
improvement. Though the HS Coding System obliges all WCO members to adopt exactly the same HS Code System at the 6
digit level, there are variances in format of reporting of 6 digit HS Codes between SAARC members. Apart from differences
in the formatting of codes, there are some errors in the codes notified. Some countries have reported HS Codes and products
that do not appear in the HS 2002 code as prescribed by the WCO. This could be the subject of technical cooperation on
harmonisation of HS Codes between SAARC countries.