The United Nations envoy for the world's vulnerable countries has hailed the entry into force of the South Asian Free Trade Area (SAFTA) agreement as a boon to the region's four poorest States: Bangladesh, Bhutan, Maldives and Nepal.
SAFTA, which became operational on 1 January 2006, was concluded by the South Asian Association for Regional Cooperation, which also includes India, Pakistan and Sri Lanka.
“SAFTA's recognition of the special needs of LDCs (least developed countries) as deserving preferential treatment is an outstanding example of the role regional trade arrangements can play in assisting weaker countries to overcome their vulnerabilities and reap the full benefits of economic integration,” said, Anwarul K. Chowdhury, the High Representative for the LDCs, landlocked developing countries and small island developing States.
By boosting exports from Bangladesh, Bhutan, Maldives and Nepal, he added, the pact can reinforce their poverty reduction efforts and foster sustainable development.
The agreement requires member countries to reduce their tariffs on products from the four LDCs to only as much as 5 per cent within three years, compared to a time-frame of seven years for the other members. Other SAFTA members are urged to take direct trade measures, such as concluding long and medium-term contracts that enhance sustainable exports from the four LDCs.
“The implementation of this package of measures will not only boost the exports of the four LDCs, both within and outside SAFTA, but it will also create employment and improve incomes, which will ultimately have a positive impact on poverty reduction,” Mr. Chowdhury predicted.
SAFTA's entry into force follows the Sixth World Trade Organization (WTO) Ministerial Conference in Hong Kong last month. There, WTO members agreed to give LDCs preferential treatment, including binding duty free and quota free access to the markets of developed countries and support to boost their export capacity.