SAFTA is supposed to open a new vista of regional economic cooperation and integration. There is no phenomenon such as Common SAARC position in WTO as the trade interests of WTO members from South Asia vary a lot. The SAARC trade ministers could not manage to meet even once between the Doha Ministerial and the Cancun Ministerial Conference of WTO. Adoption of South Asian Free Trade Agreement (SAFTA) during the SAARC summit of January 2004 in Islamabad in this backdrop is a landmark decision. SAARC member states seem to have, to some extent, set aside their parochial interests and apprehensions and 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 10- year period for full-fledged implementation. The treaty has taken up some of the issues with very clear provisions. Such areas include those on tariff reduction and the procedural aspects of the application of Balance of Payment and Safeguard measures, as well as 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 10 years, beginning 2006.

This meeting also took environmental issues as a priority area. In the Islamabad Declaration adopted at the meeting, ministers recognized 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". Here it is pertinent to mention that a “State of Environment of Pakistan Report”, was prepared by SDPI for the Ministry of Environment (MOE) before the World Summit on Sustainable Development. However, this report didn't get approved from the MOE, apparently due to the critical analysis presented in it. One wonders what reaction such reports for SAARC would our relevant environmental ministries show. Anyhow the good news is that environment is on the SAARC agenda now and it may help in alleviating the fate of poverty-ridden common masses.

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 associated apprehensions that need to be immediately 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 any lesson from the failed South Asian Preferential Trade Agreement (SAPTA). The flaws in SAPTA such as the issue of “rules of origin” and “Non tariff trade barriers' need to be meticulously looked into for the purpose of realizing true benefits from SAFTA.

Some more important issues lacking in the SAFTA treaty are the inability of the member states to draw concrete consensus on certain issues – namely, revenue compensatory mechanism, rules of origin, sensitive list and technical assistance for least developed members. Moreover, rules and regulations for the effective implementation of the Trade Liberalization Program and granting of Special and Differential Treatment to LDC members

(four of the SAARC members i.e. Bangladesh, Bhutan, Maldives and Nepal are LDCs) have not been clearly spelled out. These issues form the crux of the treaty and there is likely to be good mooting on them. Until and unless concrete and constructive negotiations are concluded on these issues, the future of SAFTA would remain uncertain.

Many of the issues highlighted above have been left for future negotiations and finalization. However, deadlines for completion of negotiations have not been mentioned in most of the cases. The only case in which a deadline has been specifically mentioned is in Article 11(e) that relates to the rules and regulations in regard to Revenue Compensatory Mechanism for the benefit of the LDCs. The rules and regulations are to be finalized before SAFTA is formally launched in 2006.

In other cases, such as harmonization of legislation, identification of special needs of the LDCs, the number of products under the sensitive list, areas of technical assistance for LDCs and rules of origin, the treaty makes no mention of deadlines. This is likely to create complications in the actual implementation of the treaty, unless of course the proposed actions are completed before the implementation of the Trade Liberalization Program.

Likewise, there are some ambiguous provisions in the treaty. These need to be reduced because the treaty is a legal and binding document, and such ambiguities have no place in a binding document. For example, Article 3(2)(f) states that the special needs of the LDCs would be clearly recognized by ‘adopting concrete preferential measures in their favour on a non-reciprocal basis'. Due to lack of deadlines and concrete plans for the identification of the special needs of LDCs, this provision is ambiguous.

Besides, the treaty has hardly any provision relating to anti-dumping, subsidies countervailing duties, technical barriers to trade and sanitary and phytosanitary measures. These issues are pertinent while a region moves into a free trading arrangement.

It is a fact that all over the world, trade between neighbouring countries is highest, with the exception of South Asia. The trade within NAFTA is 60 percent of their total trade; similarly 55 percent of the total trade of EU is within the EU region. This figure is 30 percent for ASEAN, whereas it is only 5 percent for SAARC region. SAFTA has the potential to increase the regional trade manifold, however, in order to reap these benefits we would have to push our political leaders to make SAFTA stronger. We have to work for:

Free movement of people . Movement of capital and goods would be useless unless there is free movement of people. Hence our leaders would have to work for a regime where obtaining visa for SAARC countries would not be difficult.

Trade in Services . Service sector's contribution in South Asian GDP is increasing. One must aim at increasing trade in services.

Improved physical Infrastructure: An increased movement of goods/services/persons would require an improved physical infrastructure if we want to derive the expected results.

Need of Harmonization: For us to gain benefits from SAFTA, harmonization of custom, banking (LC system understandable to bankers, and LC acceptable to the businessmen in the region) and insurance systems is necessary. Moreover, we would have to harmonize our quality standards within the SAARC region.

Finally one must not forget that trade follows investment. Trade volume cannot increase in the real sense if there is no investment. Hence for SAFTA to be meaningful, we need to work towards a regional agreement/framework for promotion as well as protection of investment.

Critically speaking SAPTA did not lead to any real gain. For years we were fooling ourselves by giving concessions to neighbouring countries in commodities which they don't produce/trade at all. Now SAFTA must try to make it successful. Who knows, increased trade and investment in the region may be the key to lasting peace!