Table of Contents
Non-functional SAFTA
Para tariffs
These are duties levied on imports but not on domestic production. These Para tariffs are kept out of SAFTA thus leads to artificial high tariffs. E.g. simple average tariff in Bangladesh in fiscal year 2016/17 almost doubles, from 13.3 percent to 25.6 percent due to Para tariffs.
Sensitive List –This list comprises goods that are exempted from tariff rationalization. Almost 35 percent of the value of intraregional trade in South Asia is subject to sensitive list tariffs. There is no provision in SAFTA to phase out this list
Non-Tariff Measures – Non-tariff barriers (NTBs) in form of sanitary, labor, phyto-sanitary etc. are abnormally high for specific products and market combinations in South Asia.
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- It varies from over 75 percent to over 2000 percent. E.g. port restrictions are imposed by several countries in the region. For instance, Pakistan allows only 138 items to be imported from India over the Attari–Wagah land route, the only land port between the two countries.
- Lack of Border infrastructure and procedural delays-There is poor transportation and logistics infrastructure across south Asian borders.
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- Inefficient customs and border procedures makes the trade slow thereby increasing the cost of trade. e.g. cumbersome product registration and requisite authorization processes for pharma import.
- Poor Regional Connectivity-There is dearth of air, land and water transportation in the region. The service trade is hugely restricted due to unfriendly visa regimes. It restricts FDI and development of regional value chains
- Lack of normal trade between India and Pakistan- The complex trade relation between India and Pakistan has heavily impacted South Asian trade. The two countries account for 88% of the region’s GDP. The trade potential is of $37 billion which today stands at $2 billion only.
- Trust Deficit- There is security dilemma in the South Asian region due to large size of India vis-à-vis other countries in the region. This fear and insecurity give rise to mistrust which is perpetuated further by a lack of people-topeople interactions and partnerships
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