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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2710

Lanka-DoC calls for speedier exporter action to grab world’s largest regional market

As SAARC’s GDP growth is now projected at 5%, intra-regional trade growth becomes a key driver in the region’s GDP. Just as trade barriers, absence of prompt action on such barriers can equally ‘guarantee’ trade-setbacks.

“Success of a bilateral or regional free trade agreement is measured by the volume of trade it creates. If a long list of concessions has generated only a nominal volume of trade, the agreement has to be reviewed for improvement. Non-tariff barriers usually limit reaping of the full benefits of an FTA.

In fact, it is the responsibility of our exporters to report all such barriers –I repeat, all such barriers-to our Department of Commerce immediately for corrective measures since we too are always on priority standby for them! Such immediate action can help considerably improve our powerful FTAs with longstanding trade-partners” said PD Fernando, Director General of Commerce of Sri Lanka on 21 August in Colombo.

DG SL-Commerce Fernando was addressing the eighth SAARC Committee of Experts (8SCOE) held in Colombo on 21-22 August, as the Chairman of the two day sessions.

The 8SCOE was the essential and critical precursor to the successfully concluded seventh SAARC Ministerial Committee meeting on 23 August in Colombo. During the Colombo SCOE sessions, for the first time in SAARC’s history, representatives of the private sector (including members of export community) facilitated by the Department of Commerce of Sri Lanka, actively took part in formulating future SAARC trade directions, giving their inputs.

Top Commerce officials with powers to decide on their national trade policies from Sri Lanka, India, Pakistan, Bhutan, Maldives, Nepal, Bangladesh, as well as officials of SAARC Chamber of Commerce and Industry sat together in a two day marathon session of in-depth deliberations to enhance export revenues.

• ‘Phone us immediately!’ -Fernando, Lanka’s DG Commerce

• Lanka’s exports to rest of SAARC jump by 36%

• ‘Increase SAARC Visas, Introduce a SAARC mobile SIM’–SAARC Chamber

• ‘350+ SAARC products are hi-complementarity, costing region $2 Bn annually’–SAFTA in Colombo

• If 350+ products brought from outside imported from SA, regional trade growth up by 20%

• ‘Proven Int’l trade models have not worked in South Asia’–SAARC Chamber

Sri Lanka’s exports rest of the SAARC region has been on a steady climb. According to the EDB, the total exports to rest of the SAARC from Sri Lanka in 2008 stood at $561 Mn and it increased by a considerable 36% by 2012 to $ 764 Mn. In 2012, Lanka’s top four export products to the rest of the SAARC were animal feed (8.17% of total SAARC exports), woven fabrics (7.03%), insulated wires & cables (5.53%) and pepper (5.48%).

Presently, total trade under SAFTA stands at $ 2.4 Bn. The surging SAFTA market has a huge consumer headcount at 1.6 Bn, and therefore is ‘highly promising’. In fact, SAARC’s grouping of its 8 member states is the biggest of any regional organization in the world consisting of 23% of world population and therefore is world’s biggest regional economic grouping.

With India’s new push to increase SAARC trade to $ 40 Bn by 2015 and recent developments in Indo-Pakistan trade expansion, the vision of SAARC Economic Union by 2020 has gained new impetus. Chief amongst the markets within SAFTA are India (world’s second most populous nation, 192 Mn estimated households), Pakistan (world’s sixth most populous nation and second urbanised country in SA, with 28 Mn estimated households), and Bangladesh (world’s eighth most populous nation with 34 Mn estimated households). As a result of equipping the region with new ports, airports and logistic facilities during the last decade, SAFTA shows potential to be an emergent Asian Corridor.

Officials from SAARC member countries present at SCOE readily agreed with Fernando’s statement, and the SCOE Colombo’s deliberations thereafter continued on the broad directions outlined by SL DG Commerce Fernando who is a veteran trade practitioner with 34 of experience in international trade serving for Sri Lanka in such key stations as Karachchi, Tokyo, Bonn, Brussels, Dubai and Sydney.

“We, the Sri Lanka delegation propose two new items on Dispute Settlement and Trade Facilitation. During our Committee of Experts’ sessions here, we are also evaluating the progress of the Tariff Liberalization Programme (TLP), the status of reduction of Sensitive Lists under Phase II of the SAFTA, progress on the SATIS Agreement, and issued related to the Least Developed Countries of SAARC. I draw the attention of the Members to the need of the SAFTA Committee of Experts to examine the progress of particularly the TLP, reduction of Sensitive Lists, including a number of proposals by the Working Groups, and progress under SATIS. I also note that a number of issues are to be discussed relating to the considerations of LDCs under SAFTA” said SL DG Commerce Fernando.

Muhammad Iqbal Tabish (Secretary General SAARC CCI), who made a detailed presentation on SAFTA trade based on SAARC CCI’s views, said:

“In conducting trade, such well known models as the ‘Absolute and Comparative advantage trade theory’, ‘Hecksher-Ohlin Model’ (factors endowment theory), ‘New Trade Theory’, and ‘Tinbergen’s Gravity Model of Trade’ have experienced success in other regions like ASEAN, and COMESA. Then what is wrong with South Asia?” Tabish asked.

Tabir continued: “Among the problems in South Asia are incidence of less complementarities, Bilaterals serving as a parallel mechanism to SAFTA instead of complementing it (for example, Visas liberal on Bilateral, complex at regional level). Products with high trade complementarity and intra-regional trade potential must be identified by matching those with high import demand in one or more of SAFTA member countries and corresponding export capacity in one or more of SAFTA trading partners. A 2012 study, applying this criteria has identified more than 350 product lines (at 6-digit level) with high trade complementarity from the sensitive lists of SAFTA members. If current imports of these products are sourced from within South Asia instead of RoW, SAFTA countries together stand to save a minimum of US$2 billion annually on their import bills.

This would also increase intra-regional trade by at least 20% of its current level. Private Sector contribution has been acknowledged as the “Engine of Growth” however, mobility of the engine has been hostage to the complex Visa Policy and procedures in South Asia. Visa for South Asian citizens and businessmen in USA & UK is allowed for 5 years, 2 Yrs for EU & Schengen states, and three years between Bangladesh and India, 1-2 years between India and Pakistan. On arrival Visa is available on bilateral basis in Nepal, Bhutan, Maldives and Sri Lanka. It is highly irrational that Visa Exemptions Sticker Policy particularly for businessmen has become “the most complex” in terms of procedures and validity period, which has been curtailed to a maximum 90 days instead of one year.”

Discussing ways to improve regional connectivity, Tabish suggested: “Allowing cellular companies to introduce unified data base of the users of cellular phone. It would lead to introduction of SAARC SIM that could be operated in all member countries. Making single page document equally acceptable as shipment clearance certificate, open sky policy in South Asia to improve air connectivity ensuring direct flights between capitals and other major cities, permission to private airlines to operate in the region, exploring the possibility of establishing a SAARC Airline, will also improve connectivity.”

- Asian Tribune –

PD Fernando, Director General of Commerce of Sri Lanka and a veteran int’l trade practitioner with 34 yrs experience across the world, addresses the SCOE in his capacity as the ‘Chairman of SAARC Committee of Experts’ on 21 August at Cinnamon Grand Hotel, Colombo.
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