SAARC trade ministers could not manage to meet even once between the November 2001 Doha Ministerial and the August 2003 Cancun Ministerial Conference of World Trade Organisation (WTO). There is no such thing as a 'common SAARC position' at the gatherings of the WTO, and this is because the trade interests of the WTO members from Southasia vary a lot. Against this backdrop, the adoption of the South Asian Free Trade Agreement (SAFTA) at the January 2004 SAARC summit in Islamabad could be considered a landmark decision. SAFTA is supposed to open a new vista of regional economic cooperation and integration. SAARC member states seem to have, to some extent, set aside their parochial interests and apprehensions and decided to move forward with an open mind towards creating a free trade area. First, the sense of urgency for SAFTA is laudable. Second, the normalisation of India-Pakistan relations becomes very critical for the operation of the free trading regime in its true sense.
SAFTA is slated for launch in 2006, with a ten year period for full-fledged implementation. The treaty has taken up some of the issues with very clear provisions including those on tariff reduction and the procedural aspects of the application of balance of payment and 'safeguard' measures, as well as a dispute settlement mechanism. The treaty has clearly stipulated the actions that contracting states can take while facing balance of payment difficulties, during import surges or in the case of disputes. Likewise, the treaty has also laid down a clear path for tariff reduction, which spans ten years, beginning 2006.
This meeting also took environmental issues as a priority area. In the Islamabad Declaration adopted at the meeting, ministers recognised the need to "undertake and reinforce regional cooperation in the conservation of our water resources, environment, pollution prevention and control as well as our preparedness to deal with natural calamities". Ministers also encouraged the establishment of a Coastal Zone Management Centre in the Maldives. Five out of seven SAARC members have long coastal zones and this management centre would study the nature of problems such as tidal surges, cyclones and the greenhouse effect. Ministers furthermore "stressed the early submission of the State of the Environment (SOE) reports to expedite the preparation of SAARC State of Environment report and the commissioning of the work on drafting a Regional Environment Treaty". It is pertinent to mention here that a "State of Environment of Pakistan Report", prepared by the Sustainable Development Policy Institute (SDPI) for Pakistan's Ministry of Environment (MOE) before the 2002 World Summit on Sustainable Development could, however, never get approval from the MOE apparently due to the hard facts and critical analysis presented in the report about the state of the environment in Pakistan. One wonders if such report for SAARC would be digestible to our relevant environmental ministries. Anyhow, the good news is that environment is on the SAARC agenda now and if implemented in letter and spirit, the Islamabad Declaration could be a fruitful juncture for 'trade and environment'.
Despite the historic adoption of the SAFTA treaty, the treaty itself does not incorporate all components that are essential for the effective functioning of a free trade regime. There are some apprehensions that need to be immediately, or at least in the near future, addressed. These apprehensions arise due to the fact that the SAFTA treaty has some confusing provisions and gray areas. Besides, many issues that should have been addressed in the initial treaty itself are lacking. It seems that the negotiators have not learnt their lessons from the failed South Asian Preferential Trade Agreement (SAPTA) which was inked in 1993. The flaws in SAPTA such as the issue of 'rules of origin', 'non tariff trade barriers', etc., need to be meticulously looked into for the purpose of realising optimal benefits from SAFTA.