Committed to PEOPLE'S RIGHT TO KNOW
Vol. 5 Num 745 Sun. July 02, 2006  
   
Business


Enforcement of Safta
Experts suggest removal of non-tariff barriers


Identifying non-tariff barriers as the main bottleneck in implementing Safta agreement, the country's experts expressed their mixed reaction over the benefit Bangladesh can reap from the deal, which came in effect yesterday.

They, however, underscored the need for participation of all Saarc nations in making the deal properly effective.

"There is no way to avoid any clause of the agreement as Saarc member states altogether signed the deal," a commerce ministry official, who was involved in all negotiations on establishing a free trade zone from the very beginning, said, fearing that non-tariff barriers might be turned into a crucial issue in enforcing the deal.

The official is learnt to have a vast experience about trade problems among the forum member countries.

When asked about how Bangladesh can be a beneficiary of the seven-nation deal, the official said the country can get benefit through export of fish, vegetables, jute, tea, leather, readymade garments, home textiles, medicines, processed food, consumer goods, cosmetics, handicrafts and ceramics to other Saarc countries.

"It will get trade benefits under Safta not from all countries. But as per the deal, it can get some export benefits from India, Bhutan, Sri Lanka and the Maldives," the official added.

He said Bangladesh will have duty-free access of jute and jute goods, fruit, leather products, ceramic, electrical goods to India's big market as the giant member country of the region keeps these products out of its sensitive list.

"A number of Bangladesh's export items including ceramic, melamine products, garments, fruit juice, electrical wire, leather and footwear, edible oil, hilsa fish and traditional jute products have huge demand in the Indian market. But due to non-tariff barriers such export potential is yet to be tapped," said Shishir K Deb, chief executive officer of Bangladesh Foreign Trade Institution (BFTI).

Dwelling on the problems of non-tariff barriers imposed by the Indian customs, he said the Indian authority does not seem to accept certification from Bangladesh organisations, although these products are also exported to the EU and US markets.

In the Safta sensitive list, Pakistan includes potential export items of Bangladesh such as jute, fabrics, woven and knitted garments, special woven fabrics, made-up textiles and footwear.

"Although Bangladesh will not get much benefit from Pakistan under the Safta, it is possible to export some major items to Pakistan through bilateral deal, which is under process," said the commerce ministry official.

He said as per the commitment of high level officials of both Bangladesh and Pakistan are supposed to sign bilateral deal by September this year, which may help Bangladesh get market access of some major export items.

According to Export Promotion Bureau, Bangladesh exported goods worth $46.17 million to Pakistan in July-March period of FY 2005-06, which is 0.61 percent of the total export earnings of the country. The main products that Bangladesh usually exports to Pakistan are raw jute and tea.

Sri Lanka sensitive list includes fish, leather and footwear, while all major export items of Bangladesh except tea are excluded from the sensitive list of Bhutan. So, Bangladesh will get a chance to boost its export to these countries.

Meanwhile, major export items of Bangladesh such as fish, jute fabrics, woven and knitted garments, made-up textiles and footwear are on the sensitive list of Nepal. Only three major items of Bangladesh is on the sensitive list of the Maldives.

Data of the country's promotional agency for export show that the main export items of Bangladesh to the Saarc region are chemical fertilizers, raw jute, frozen fish, leather goods, tea, ceramic, garment and textile products.

As per the Safta, Bangladesh will have to allow for the next six months imports of other than items under its sensitive list from the contracting states by reducing 2.5 percent tariff from the existing rates. The highest rate of customs duty in Bangladesh is 25 percent.

India, Pakistan and Sri Lanka will reduce their tariffs for Bangladesh and other LDC contracting states by 10 percent from their existing rates for next six months as per the negotiation concluded at the maiden SAFTA Ministerial Council meeting in Dhaka on April 20 this year.

Under the Safta roadmap, the developing member-states will bring down their tariffs to 0-5 percent in three years while the Saarc least developed country like Bangladesh will do it in a time span of 10 years.

The member-states had decided to notify the non-tariff measures (NTMs) and para-tariff measures (PTMs) they face with their exports to other states of the regional body by October 1 this year.

A commerce ministry source said the sub-group already held their first meeting in Kathmandu on May 16-17, finalising the terms of reference of the group. They also decided to hold the second meeting in Bhutan on August 1-3.