India weighs suspension of Safta sops

NEW DELHI: India is considering suspension of all trade concessions under the South Asian Free Trade Area (Safta) pact till Pakistan keeps the market access commitments incorporated in the regional trading arrangement. If India goes ahead, Safta could plunge into a major crisis, and resurrecting the trade pact would become virtually impossible.

Some sections in the government, especially the ministry of external affairs, are so upset with Pakistan’s attitude that they have suggested that Safta should be grounded till the neighbour falls in line. Islamabad has been denying the most-favoured nations (MFN) status to India till now and is resisting market access for Indian products. Instead of going by Safta, Pakistan is maintaining its own list of items which could be exported from India. Exporters from India have also been denied the benefit of exporting through land routes.

Government sources confirmed the growing resentment within the government over Pakistan’s attitude. The external affairs ministry has also suggested that India should withhold the next phase of concessions under Sapta’s trade liberalisation programme (TLP), which is due in December ’06.

The Prime Minister’s Trade & Economic Relations Committee (TERC), which recently met and considered the two options, also looked at a third option of keeping in abeyance the TLP concessions available to Pakistan. As the commerce and industry ministry is not in favour of retaliation at this stage, India might wait for the October meeting of the Safta ministerial council before rocking the boat.

In the past, too, the commerce and industry ministry had desisted from retaliation and Pakistan has not been dragged to the WTO so far for denying MFN status to India.