implementing steps for consolidating and growth of saarc
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Implementing Steps for Consolidating and Growth of SAARC. Saman Kelegama Institute of Policy Studies of Sri Lanka. SAFTA Trade Liberalization Programme (TLP). The TLP stipulates 0-5% tariffs for Non-LDCs by 2013 (SL 2014), LDCs 2016 Danger of SAFTA losing relevance due to competing RTA/BTAs - PowerPoint PPT PresentationTRANSCRIPT
Saman KelegamaInstitute of Policy Studies of Sri Lanka
The TLP stipulates 0-5% tariffs for Non-LDCs by 2013 (SL 2014), LDCs 2016
Danger of SAFTA losing relevance due to competing RTA/BTAs
Article 7.2 allows countries wishing to move faster to do so unilaterally
Better approach to include fast track for heavily traded goods in SAARC
The 15th SAARC declaration stated to reduce the negative list and remove NTBs and para-tariffs expeditiously. It also referred to implementing trade facilitation measures
But time frames were not fixed and they were not made binding commitments
Challenge is to identify the easy NTBs to remove and trade facilitation measures that could be immediately implemented.
South Asia plagued by transaction costs Trade facilitation increasingly important
for modern trade, benefits resonate beyond SAFTA
SAFTA agreement has extensive list of TF measures without binding commitments
TF measures have high fixed costs, benefits felt in medium-long run, thus little political will to implement
Effective DSM essential for effective rule based system
SAFTA DSM too long, 330 days. ASEAN 290, MERCOSUR 265, NAFTA 310
Excess time in 1st stage, accused can delay consultations by a month
Time allowed for compliance 90 days in SAFTA. 30 days in ASEAN, MERCOSUR
Length of DSM attributed to LDC requirements.
Better to use differentiated time periods for LDCs and Non-LDCs
Voting on consensus basis, problematic considering heterogeneity of interests
Consensus to block or simple majority system are alternatives to consensus basis
SATIS framework now in place Start liberalization of items already
committed with the WTO, like tourism and then move onto other services
15th SAARC Declaration refereed to a comprehensive action plan for tourism which includes: ““facilitating the movement of people through improved travel infrastructure and air, sea, and land connectivity among the SAARC countries……and promotion of SAARC as a common destination through public-private partnerships and joint campaigns”
Visa issuance and monitoring Improved air connectivity – member states should
offer 5th freedom to designated regional airlines Innovative methods: “ASEAN Air Pass”, “ASEAN
Hip Hop” – a visit to one member country qualifies the traveller a concessionary rate to the other member country
Twining of SAARC cities Annual South Asian Tourism Events Directory Promotion of Tour Circuits: Ramyana Trail,
Buddhist Circuit, etc. – under PPP
Investment LiberalizationCreating Special Development Funds
SAARC EPG report argues for creating a SAARC Investment Area
Intra-regional investments can assist in creating supply capabilities
Investment integration can facilitate industrial restructuring to assist in building supply capabilities in relatively smaller and lesser developed economies
There is substantial potential in increasing intra-regional trade and efficiency-seeking restructuring of industry and creating supply capacities in relatively lesser developed members
South Asia Scenario: Emergence of regional hubs: Sri Lanka for rubber-based industries; Bhutan for forest-based industries; Bangladesh for energy-intensive industries, India for IT, etc (RIS, 2008)
By facilitating development of supply capabilities in smaller and lesser developed countries in the regional groupings, the industrial restructuring leads to more balanced regional development
ASEAN Investment Area, ASEAN Industrial Cooperation, etc., are partly based on this idea
Less developed countries (viz. Spain, Portugal, Greece, Ireland in EU) are the key beneficiaries of integration through industrial restructuring and building of supply capabilities
Sri Lanka has benefited from Indian investment in increasing export and supply base development
Faster growth and convergence of levels of development can be achieved
SAARC EPG Report (1998) recommended US $ 500 mn for establishing a South Asia Development Fund [SDF] (with major contribution from the more developed member countries, and possible outside sources)
SDF now established with major contributions from India. Funds could be utilized for supply-side development of LDCs
EU – Fund was available for Ireland, Portugal, etc.
GMS under ADB support for supply sector development of Southeast Asia
SAARC ‘observers’, they can be invited to contribute to the Development Fund
In the proposed Indo-Lanka Comprehensive Economic Partnership Agreement’s there is an ‘Economic Cooperation’ window where India will assist Sri Lanka through concessional credit lines to develop the supply side
SAARC is the only inter-governmental framework available to expedite economic cooperation and it has to fast track the trade liberalization programme and initiate investment liberalization without further delay to reap the benefits of deep economic integration
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