Tariffs removal alone insufficient to increase intra-SAARC trade: Rishad

• Pakistani private investors invited to Sri Lanka

Reducing or elimination of tariffs alone is not sufficient to increase intra-SAARC trade and several other measures need to be taken to improve the situation, said Minister of Industry and Commerce of Sri Lanka Rishad Bathiudeen.

Noting that Sri Lanka was keen on promoting the interests of the region through the full potential of the SAFTA and SATIS, he noted that in addition to removal of tariffs, removal of non-tariff barriers and effective trade facilitation measures were quite vital to make the SAFTA a success.

Simplification and harmonisation of customs procedures, mutual recognition for standards, testing and conformity assessment and transport facilitation are very important measures that need to be introduced on a priority basis, he stressed.

Commerce Ministers of SAARC countries showing their unity at the 6th SAFTA Ministerial Council held in Islamabad on 16 February 2012. Minister of Industry and Commerce Rishard Bathiudeen (second from left) led the Sri Lanka delegation to this Ministerial meeting. Sri Lanka is a founder member of SAFTA.

“Sri Lanka will be happy to play its role in promoting the interests of our region with deep commitment and dedication towards the realisation of the full potential of the SAFTA and SATIS – SAARC Agreement on Trade in Services,” said Bathiudeen.

Minister Bathiudeen was addressing the 6th Meeting of SAFTA Ministerial Council meeting held in Islamabad, Pakistan on 16 February. In its latest round of trade negotiations, SAFTA members have included Afghanistan in the list of countries designated as ‘Least Developed Countries under SAFTA,’ increasing the total number of such countries to five (other four LDCs are Bangladesh, Bhutan, Maldives and Nepal).

Prior to Thursday’s Ministerial Council Meeting, on Wednesday, Minister Bathiudeen addressed the business community of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and invited Pakistani investors to Sri Lanka.

“Sri Lanka’s strong post-war growth potential is an opportunity for everyone,” Minister Bathiudeen said. “The trade and business community in Pakistan can also receive trade concessions in all the countries and groupings of which Sri Lanka is a signatory.”

On 16 Thursday, addressing the SAFTA Ministerial Council, Minister Bathiudeen said: “We are gathering at a time when the global economy is witnessing an extremely challenging situation. As you are aware, most parts of the world in particular the developed countries in the west have begun to experience increasingly tough economic conditions with substantial job losses, falling inventories, rising debts and ballooning budget deficits.

“Despite numerous efforts by the respective governments such as stimulus packages, bailouts etc., the growth rates of these countries have been stalling at near-zero levels. As countries have become so interdependent in today’s world, there is no way for us to escape the impact of this economic stagnation. Given the fact that the most of affected countries are our main export markets, the repercussions of this scenario could be really critical for nations like ours.”

Bathiudeen said there was growing fear that this economic meltdown, if it continued unabated, could result in protective policies across the world that could seriously dampen the spirit of free trade.

“While we fear the declining global economic conditions on one side, we also have to bear in mind that the disturbing political developments in the Middle East could also pose formidable challenges for us. The Middle East region plays a key role as the principal supplier of oil to the world. It is also a major destination for our exports. As such, these political disturbances could eventually lead to disastrous consequences that may cripple even the entire world economy.

“In the circumstances, there is no guarantee that our current export markets will remain the same for us over the coming years. It is, therefore, crucial that we make maximum use of this ministerial meeting and put our best efforts together to work out a pragmatic strategy that could effectively harness our synergies for promotion of free trade and investment within our region.”

Stressing on the need to increase further trade liberalisation within SAARC region, Minister Bathiudeen said: “At the first meeting of the SAFTA Ministerial Council, all of us anticipated that SAFTA would pave the way to increase the intra-regional trade. Even though we have created a better framework and institutional mechanism for this purpose, the volume of intra-SAARC trade has still not reached anywhere closer the desired level. All of us admit that the long Sensitive Lists, which include most of the tradable products, have been one of the major obstacles for this scenario.”

Bathiudeen also touched on the hidden barriers such as the lack of transparency, procedural delays and inefficient administrative procedures or red tape. “It is imperative that we identify and take speedy action to address these critical areas as well, if we are to realise enhanced trade and investment flows across our region. It is equally important that we form strategic alliances and make use of our synergies for the purpose of venturing into markets outside the SAARC region. This move is particularly relevant in the context of our regional trade today, where we find relatively limited complementarities among our own export industries.”

Outlining Sri Lanka’s new economic resurgence, Minister Bathiudeen said: “After nearly three decades of terrorism, the Sri Lankan economy has now reached a new era, where we have to have a fresh look at our potential. For example, some of the industries such as the fisheries sector, which suffered heavily at the hands of terrorism over the last three decades, have now received a new lease of life and the supplies have begun to increase steadily. The agro sector, particularly in the north and east, has also been showing an impressive growth since the dawn of peace.

“Against this backdrop, my Ministry was compelled to have a series of consultative meetings with our stakeholders for the purpose of identifying the products to be taken off from our Sensitive List. This requirement, in fact, resulted in some delay in revising our Sensitive List and I am sincerely sorry about it. I also hope that you will understand the specific issues Sri Lanka continues to encounter as a small and vulnerable economy and seek your kind understanding and flexibility in the future negotiations as will.”

Discussing the potential of SAFTA, Minister Bathiudeen stated that liberalisation of services was a relatively new phenomenon and a fairly young concept which started in 1994. “However, with recent trends in our economic development, the services sector plays an increasingly important role in all our economies. In fact, the report on ‘SAARC Regional Study on Potential for Trade in Services under SAFTA’ clearly highlights that services have emerged as the engine of growth in the SAARC economies. Therefore, it is essential that we, SAARC members, consider taking forward this process at a pace suitable to the member states.”

However, he emphasised that this was not an easy task. “The population of South Asia is approximately 1.6 billion, one fifth of the world population. Most of us are providers of similar services, while being at different levels of development. We need to take steps to specialise in these services sectors which have potential for expansion in our domestic markets and build their export capacity. If all of us could achieve that target, we could provide our own services mutually and lessen our dependence on other countries. Sri Lanka will be happy to play its role in promoting the interests of our region with deep commitment and dedication towards the realisation of the full potential of the SAFTA and SATIS.”

Praising the SAARC secretariat, Minister Bathiudeen said: “My statement is incomplete if I do not appreciate the excellent work done by the SAARC Secretariat. It is not at all an easy task to coordinate a meeting of this magnitude with eight nations. The Secretary General and her team always make maximum efforts to ensure the steady progress of the SAFTA and the SATIS process with substantive contributions as well as regular follow-up action with the member countries. I deeply appreciate their hard work and commitment.”