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Committee
on Economic Cooperation (CEC) |
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The
CEC is mandated to formulate and oversee
implementation of specific measures,
policies and programmes to strengthen
and enhance intra-regional cooperation
in the fields of trade and economic
relations. With the creation of the
CEC, regional economic cooperation
was formally institutionalised as
an integral component of the SAARC
process.
Over
the years, the CEC has emerged as
the central group within SAARC addressing
economic and trade-related issues.
It has provided recommendations and
guidance in identifying new areas
of cooperation as well as considering
reports of specially constituted groups.
Its specific functions include analysing
inter-regional and global developments
which impact on intra-regional cooperation;
evolving joint strategies and common
approaches at international forums;
and recommending policies and measures
for promoting intra-regional trade,
joint ventures, industrial complementarity
and investments. The mandate of the
CEC covers areas ranging from quality
control, standards and measurements
to customs cooperation, harmonisation
of documentations and procedures,
preferential trading arrangements
and rules of origin, and the transition
from the SAARC Preferential Trading
Arrangement (SAPTA) to the South Asian
Free Trade Area (SAFTA).
The
recommendations of the CEC are submitted
through the Standing Committee to
higher SAARC bodies, namely the Council
of Ministers and the Summit. Eleven
Meetings of the CEC have been held
so far.
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Meetings
of Commerce Ministers |
| Recognising
the important role economic cooperation
plays in South Asia and the need to
give policy directives at a Ministerial
level, the first meeting of SAARC Commerce
Ministers was held in New Delhi in January
1996. Since then, two more meetings
of the Commerce Ministers were held
in Islamabad (April 1998) and Dhaka
(February 1999). These meetings focused
on enlarging the scope and coverage
of regional economic cooperation. Separate
meetings of Commerce Ministers were
also held to evolve common positions
on issues before WTO Ministerial Meetings.
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SAARC
Preferential Trading Arrangement (SAPTA) |
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In
December 1991, the Sixth Summit held
in Colombo approved the establishment
of an Inter-Governmental Group (IGG)
to formulate an agreement to establish
a SAARC Preferential Arrangement (SAPTA)
by 1997. Given the consensus within
SAARC, the Agreement on SAPTA was
signed on 11 April 1993 and entered
into force on 7 December 1995 well
in advance of the date stipulated
by the Colombo Summit. The Agreement
reflected the desire of the Member
States to promote and sustain mutual
trade and economic cooperation within
the SAARC region through the exchange
of concessions.
The
basic principles underlying SAPTA
are:
overall
reciprocity and mutuality of advantages
so as to benefit equitably all Contracting
States, taking into account their
respective level of economic and industrial
development, the pattern of their
external trade, and trade and tariff
policies and systems;
negotiation of tariff reform step
by step, improved and extended in
successive stages through periodic
reviews;
recognition of the special needs of
the Least Developed Contracting States
and agreement on concrete preferential
measures in their favour; and
inclusion of all products, manufactures
and commodities in their raw, semi-processed
and processed forms.
So far, four rounds of trade negotiations
have been concluded under SAPTA covering
over 5000 commodities. Each Round
contributed to an incremental trend
in the product coverage and the deepening
of tariff concessions over previous
Rounds. The Member States are in the
process of completing the necessary
procedural formalities to give effect
to the concessions extended in the
Fourth Round.
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South
Asian Free Trade Area (SAFTA) |
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SAPTA
was envisaged primarily as the first
step towards the transition to a South
Asian Free Trade Area (SAFTA) leading
subsequently towards a Customs Union,
Common Market and Economic Union.
In 1995, the Sixteenth session of
the Council of Ministers (New Delhi,
18-19 December) agreed on the need
to strive for the realization of SAFTA
and to this end an Inter-Governmental
Expert Group (IGEG) was set up in
1996 to identify the necessary steps
for progressing to a free trade area.
The Tenth SAARC Summit (Colombo, 29-31
July 1998) decided to set up a Committee
of Experts (COE) to draft a comprehensive
treaty framework for creating a free
trade area within the region, taking
into consideration the asymmetries
in development within the region and
bearing in mind the need to fix realistic
and achievable targets.
The
Agreement on South Asian Free Trade
Area (SAFTA), drafted by the COE,
was signed on 6 January 2004 during
the Twelfth SAARC Summit in Islamabad.
The Agreement is to enter into force
on 1 January 2006. Currently, the
Sensitive Lists of products, Rules
of Origin, Technical Assistance as
well as a Mechanism for Compensation
of Revenue Loss for Least Developed
Member States are under negotiation.
Under
the Trade Liberalisation Programme
scheduled for completion in ten years
by 2016, the customs duties on products
from the region will be progressively
reduced. However, under an early harvest
programme for the Least Developed
Member States, India, Pakistan and
Sri Lanka are to bring down their
customs duties to 0-5 % by 1 January
2009 for the products from such Member
States. The Least Developed Member
States are expected to benefit from
additional measures under the special
and differential treatment accorded
to them under the Agreement.
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Enhancement
of Institutional Capacity |
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The
Tenth Summit (Colombo, 29-31 July
1998) recognised the need to strengthen
individual financial systems of the
SAARC countries through enhancement
of their institutional capacity and
surveillance mechanisms as well as
through closer consultations on and
coordination of macroeconomic policies
where appropriate. In order to enhance
SAARC's collective capacity in respect
of policy analysis with specific emphasis
on international financial, monetary,
trade and investment issues, meetings
of finance officials of SAARC countries
including regular consultations between
Governors of Central Banks have been
held within the framework of SAARCFINANCE
- a grouping consisting of the Governors
of Central Banks and the Finance Secretaries
of Member States.
In
addition, as mandated by the Tenth
Summit, a Network of Researchers on
Global Financial and Economic Issues
has been set up to identify, analyse
and help SAARC face up to global financial
and economic developments affecting
the region. The Network which brings
together the private sector, central
banks, planning ministries, research
institutes and eminent economists
nominated by Governments has been
working on an immediate and long-term
research agenda to help identify areas
of common concern as also new areas
of cooperation among Member Countries.
The Network brings out the South Asia
Economic Journal. It has also compiled
a Directory of Research Institutes
in South Asia focusing on global financial
and economic issues.
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The
Private Sector |
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The
private sector has played an important
role in steering the SAARC economic
agenda forward. The SAARC Chamber
of Commerce and Industry (SCCI), set
up in 1992 as a SAARC-recognized Apex
Body, has played a significant role
in this regard by bringing together
under one umbrella the national chambers
of commerce and industry of Member
States. Its activities range from
promoting trade and interaction of
the business community within the
SAARC region to providing inputs for
SAPTA and SAFTA. The SCCI frequently
organises Economic Cooperation Conferences
in different Member States to focus
on building stronger partnership and
collaboration between Governments
and Industry.
At
the Eleventh Summit (Kathamandu, 4-6
January 2002), the Leaders renewed
their commitment to encouraging the
participation of the private sector
and assured their full support for
the latter's socially responsible
economic initiatives. They appreciated
the efforts of the SCCI to promote
regional economic cooperation in the
spirit of public and private sector
partnership. A declaration on Government-Industry
Partnership Affirmation was presented
by SCCI to the Council prior to the
Eleventh Summit.
The
South Asian Federation of Accountants
(SAFA) is another SAARC recognized
Apex Body.
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