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| :: Saarc in talks to liberalise trade in services ~ |
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South Asia has commenced negotiations in to incorporating trade in services to the South Asia Free Trade Agreement (SAFTA) but a lack of data could slow things down, a senior economist said.
"So far there have been three meetings and the possible initial lists for exchange have been identified without any commitments," Dr Saman Kelegama, Executive Director of the Institute of Policy Studies (IPS) told the Island Financial Review.
He said that now was the best time to incorporate trade in service in to Safta which would facilitate the trade in goods and strengthening the regions economy though enhanced integration now that the world is engulfed in a global economic crisis.
"This is the time we should be looking at developing intraregional trade with Asia expected to maintain healthy growth while traditional export markets in the US and EU are experiencing a slump," Kelegama said.
The economies of the South Asian Region are bolstered by the services sector contributing about 55 to 60 percent to the region's GDP, far above manufacturing and agriculture, but trading of services between the countries is small.
"It only makes sense that the main source of economic growth is made tradable," Kelegama said.
He said the nexus between trade in goods and services was an important factor to consider as services such as banking, insurance, shipping and aviation go a long way in boosting the movement of goods and enhancing payment channels.
But the problem with the Saarc process is that political issues take precedence of economic matters.
For as long as India and Pakistan remain at loggerheads with one another, many economists in the region say Saarc will not be able to deliver the economic benefits to its people which is the ultimate objective of the regional grouping.
"Unfortunately, it is a characteristic of this part of the world where political interests come before economic interests," Kelegama said.
It is hoped that Safta would fully liberalise trade in the region by 2016.
But this may never happen as non-tariff barriers, high tariffs rates and the non-availability of a mechanism to bind countries to their commitments has made Safta non-existent. |
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