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Trimming of Safta 'sensitive list' to benefit South Asian countries

Publication Date : 09-10-2012

 

Pakistan is paying more than US$206 million on import of 88 commodities in the sensitive list under the South Asia Free Trade Agreement or Safta, which can be imported at a lower price from neighbouring countries, especially India.

The country’s high number of items in the sensitive list therefore restricts the flow of trade with its neighbouring countries under Safta, according to a report titled "Cost of Economic Non-Cooperation to Consumers in South Asia", conducted by CUTs International, a copy of which is available with Dawn.

If Pakistan reduces items in its sensitive list, the maximum benefits will be accrued from direct imports from India, which stood at 98.89 per cent.

In case Pakistan allowed import of these commodities from South Asian countries such as India, Nepal, Bangladesh and Sri Lanka it could save an additional amount on imports non-regional countries.

The import of pharmaceutical products alone stands at 84.72 per cent, and Pakistan is paying far more through importing from other than South Asian countries.

The share of electrical, electronic equipment is 13.79 per cent, which again are imported at higher cost from non-regional countries.

On the whole, South Asian countries could save at least $2 billion per year on trading a range of products that have both high intra-regional trade potential, which is a conservative estimate and gains are likely to be much higher.

In the case of Pakistan, the results showed a selection of 44 products line from its sensitive list with an aggregate saving of $206.18 million, which is close to 60 per cent of its current import bills on the selected product categories.

For India the results for trading with South Asian countries especially with Pakistan stood at $598 million.

As per the study, India is paying $545 million more on imports of 63 products that it is not importing from Pakistan. The import of these products from Pakistan could mean a saving of more than $545 million for the Indian exchequer.

An interesting fact is that more than 90 per cent of benefits could have been accrued in case of import of plastic-based articles from Pakistan.

This shows that export of plastic products have great potential in India but largely remains untapped.

Similarly, Bangladesh could have saved more than $227.01 million on the import of 14 products had it imported from Pakistan.

At the same time, Nepal is paying more than $255.04 million on imports of 20 items which could have been imported at much lower rate from Pakistan.

 

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