SAARC trade fairs are organized on a rotational basis by the member countries. The fair was hosted by Sri Lanka in 2008 and by Bhutan in 2009. Nepal is hosting the trade fair for the second time. The first one was held in Kathmandu in 2002. Such a trade fair can act as a complementary and supplementary measure in promoting intra-regional trade and investment linkages. Hence, the objectives of trade fairs go beyond the exhibition and sales of goods, rather it serves as an instrument of promoting economic cooperation in South Asia. The 10th fair is being hosted in Kathmandu at an opportune moment when the SAARC Agreement in Trade in Services (SATIS), signed in Bhutan last year, has gone into the process of ratification by the member countries and South Asian Regional Standard Organization (SARSO) has been created and new areas of cooperation, particularly in the field of bio-technology and renewal energy, are on the table for discussions.
The process of economic cooperation under SAARC started with the signing of South Asian Preferential Trade Agreement (SAPTA) in 1993 and implementation of the agreement in 1995. But it was increasingly felt that a jump start on free trade area was needed as the process of trade integration under SAPTA was slow and ineffective since the agreement focused on exchange of tariff concessions on a product by product basis and the negotiations were too complex and time-consuming since the negotiators had to deal with every individual product to get tariff concessions from the other party. The total number of products for duty concessions at six-digit level of customs classifications reached more than 5,200 products at the end of three rounds of negotiations but it could not catch the spirit of free trade as most of the tradable items were kept outside the list of trade concessions and there was a lack of seriousness to go for a deeper cut in tariff in order to achieve the intended objective of regional trade integration.
It was in this context that the process of South Asia Free Trade Agreement (SAFTA) was started. In 1998, the SAARC Summit in Colombo decided to form a Committee of Experts (COE) to draft and negotiate the free trade area agreements among the member countries. From 2000, the meetings of the committee were held for seven times and the last meeting held in Islamabad finalized the text of the agreement, which was signed by the foreign ministers during the SAARC Summit in January 6, 2004. The agreement is a step forward in realizing the goal of common market in South Asia through the progressive path of free trade area, customs union and economic union.
SAFTA is now in the fifth year of implementation. However, it too hasn’t been able to do much in promoting regional integration of trade. Facilitation of transit transport, customs harmonization, and mutual recognition of quality, standards, tests and certifications are still to take shape. Moreover, the development of transport connectivity through diversification of corridors based on different modes of transportation, conclusion of regional investment promotion and protection agreements and visa facilitation have remained unfinished.
SAARC is regarded as one of the least integrated trading blocs in the world as the volume of intra-SAARC trade has for several years remained around 5 percent of the total international trade of the member countries.
Despite that, Nepal is actively participating in all trade-related activities of the regional trading bloc though Nepali trade remains largely untouched or unaccounted. The expectation of trade creation is rather shunned by trade diversion as a share of conventional Nepali exports to India is taken away by other member countries due to liberalization of tariff and regulatory regimes. A long, sensitive list maintained by the partner countries, particularly on agriculture and primary products, poor growth of transport infrastructures, non-tariff and para-tariff barriers raised on account of plant and animal quarantine, food safety and technical standards are some of the factors contributing to slow growth of intra-regional trade. Nepali trade has not been able to diversify under the ambit of SAFTA as its inherent provisions are less favorable to Nepal in comparison to the provisions of bilateral trade with India. The most important factors in taking forward the free trade area processes is to address the facilitation measures including that of connectivity for enhancing the trade in goods and services. SAARC Regional Multimodal Transport Study has identified the measures and corridors to address these issues, which require a collective effort by the member countries for early implementations.
SAARC is regarded as one of the least integrated trading blocs in the world as the volume of intra-SAARC trade has for several years remained around 5 percent of the total international trade of the member countries. The effort to promote intra-regional trade should also be complemented by developing SAARC brand in goods and services and market them effectively within and outside the region. Such sectors may cover handicraft, agricultural goods, cottage industries, tourism, education, health and so on.
The 10th SAARC trade fair is an opportune moment to express commitments by the member to promote the cause of regional cooperation and integration. The event is likely to receive around 300,000 visitors in five days with an average of 60,000 visitors daily making a trip to Bhrikuti Mandap. This number may not be significant in comparison to the size of the population of South Asia, but the divergent programs where the member countries associate themselves would certainly send a strong signal of unity among the South Asian nations. During the event, the food festivals will give an opportunity to taste the cuisine of individual countries. The tourism fair, meanwhile, will be a major side event.
The trade fair will not merely be a ground for exhibiting the products of South Asia, but also serve as a venue for bringing people of various walks of life together to discuss, deliberate and interact on the prospects of South Asian nations to explore the areas of cooperation in order to enhance common prosperity. Cooperation on intra-regional investment, tourism, trade in services, intellectual property rights, collaboration between business to business, government to government and government to business on persuading sector-specific programs will be the added features of the fair. Meeting between sellers and buyers will also help in forging instant business deals and establishing long-term relationships between business entities and individuals.
As the host country and organizer of the event, Nepal has a special role to play during the event, particularly in providing all kinds of possible support and facilities to the delegations and exhibitors for making the fair a grand success. The fair will also serve as the ground for promoting fair trade. Looking forward to a successful trade fair!
Writer is Secretary, Ministry of Commerce and Supplies
puruojha@gmail.com
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