In many parts of the world, decisions to form and enter into free trade areas (FTAs) are often taken after considerable deliberation and consultation. Strangely at the SAARC summit, the agreement to set up a SAFTA appears to have come quickly and easily! It certainly is a welcome move to interlink the economies of the SAARC countries through free trade, but hammered out as it has been with inadequate consultation SAFTA may end up as another ineffective SAARC institution.
Safta should have been in place last year if the Saarc agenda of January 1996 had been followed. Safta could have converted the huge informal trade (around $ 2 billion between India and Pakistan) between the members into formal trade, reducing smuggling and revenue losses. Currently, the formal trade is as low as 5 per cent between the members.
Even though all the seven members were aware of the gains, the main hitch in the form of a lack of political will remained and Sapta (South Asian Preferential Trade Area), first conceived eight years ago and began with tariff cuts, never transformed itself into Safta. HT