Dhaka, July 8, The preference shown by South Asian nations for bilateral free trade agreements (FTAs) may lead to the South Asian Free Trade Agreement (SAFTA) eventually becoming redundant, trade analysts from the region have said.
Attending a conference ‘Managing Regional Integration in South Asia’ here, analysts warned that though bilateral FTAs helped increase trade and investment between the parties, the benefits to weaker or smaller economies with limited bargaining power vis a vis the larger ones might be less.
Progress in bilateral FTAs and emergence of trans-regional trading blocs, such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation that includes five of the seven member states under South Asian Association for Regional Cooperation (SAARC) “casts a shadow of doubt over relevance of the SAFTA”, the Daily Star newspaper said Wednesday.
SAFTA, which came into force in 2006 after years of debating and delays, may eventually become redundant if the focus on bilateral trade sharpens, analysts from the region said.
The conference on managing regional integration takes place at a time when a trade liberalisation programme for SAFTA suffers mainly from disputes between the two major economies in the SAARC bloc, India and Pakistan, the newspaper noted.
Analysts at the discussion observed that a number of bilateral FTAs, such as India-Sri Lanka, India-Nepal, India-Bhutan, and Pakistan-Sri Lanka, now prevail in the SAARC.
To reap increased benefits, analysts suggested that weaker economies strengthen the trade liberalisation process under SAFTA, which will give the least developed countries (LDCs) a collective voice for effective negotiations.
“Intra-regional FTAs take place due to factors like frustration of Saarc processes,” said Ratnakar Adhikari of the South Asia Watch on Trade, Economics and Environment at the regional conference.
Rajesh Mehta from India, Abid Suleri from Pakistan, and Nazneen Ahmed from Bangladesh, spoke on the occasion. It was chaired by Bishwambher Pyakuryal of Tribhuvan University, Nepal.
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