Gopal Tiwari

Kathmandu, March 23:

The seventh meeting of the committee of experts (CoE) at the joint secretary level meeting of South Asia Free Trade Area (SAFTA) currently being held in Maldives from March 22 to March 24, has been an ‘acid test’ for Nepal.

According to a source at the ministry of industry commerce and supplies, four officials from different ministries, namely industry, finance and foreign are having a hard time trying to get crucial Nepali exportable products withdrawn from the ‘sensitive lists’ of various countries, on the second day of the CoE meeting. A large number of important exportable products, like vegetable ghee have been put in the ‘sensitive list’ by India, revealed the source.

The provision of sensitive list is to protect national industries under SAFTA from excessive imports and prevent revenue downfall. Countries comprising of India, Pakistan, Bangladesh, Bhutan, Sri Lanka, Maldives and Nepal are to from a ‘free trade area’ from January 1, as per the decision taken by 12th SAARC summit held in Islamabad.

Rules of origin, sensitive list, technical assistances for LDCs and revenue and loss compensation mechanism are being discussed at length in the Maldives meet. Maldives has already submitted a draft paper on revenue compensation mechanism, which is also applicable to Nepal, said the ministry source. Prachanda Man Shrestha, joint secretary at the ministry of industry, commerce and supplies is leading the Nepali team.

Prof Bishwambher Pyakuryal, president of Nepal Economic Association, said the Maldives meeting is especially focusing on value addition, rules of origin and sensitive list. He rued the fact that Nepal has not done its homework well for joining the free trade regime, while Pakistan and India have already identified potential areas and ready for the free trade area.

“The issues of reducing non-tariff barriers, reducing transit cost from 15 per cent and trade facilitation need to be addressed before the commencement of the free trade area,” he said.

Prof Dr Madan K Dahal, head, central department of economics, Tribhuvan University said that Nepal has to identify its potentials and lobby for technical assistance for capacity building. “Exportable items from Nepal such as tea and cash crops should have competitive strength in the regional market,” he added. As per the SAFTA provision, LDCs need to reduce tariff between zero to five per cent within 10 years from the day of SAFTA enforcement. Non-LDCs are needed to bring down their tariff rates between zero to five per cent within seven years of SAFTA implementation. Under such a circumstance, ill-prepared and weaker economies are likely to face a difficult time, commented Dahal. The CoE Maldives meeting is the second last meeting, before a final meeting of CoE, scheduled to be held in Kathmandu from April 17 to 19, 2005.

SAARC hosts 20 per cent of the world’s population while it occupies only one per cent of the global trade. Its import trade is limited to only 1.2 per cent of the total global trade. Nepal’s share in the world trade is only 0.02 per cent.