Legal and Non-Legal Barriers to South Asian Free Trade
University of Kansas
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The business potential of the South Asian region is huge. Better regional cooperation in the South Asian region promises large gains in welfare and growth. However, various obstructions stand in the way of realizing the true potential of this region. In trade liberalization, there are always winners and losers. Considering the bigger picture, short run procedures are liable to lose and limited procedures that export will gain because of better input. This business environment causes domestic procedures to encourage increased productivity and consumers will be the ultimate gainers. SAFTA had a modest beginning. Despite this SAFTA has set the pace for tariff reduction for LDCs and non-LDCs Member States and laid down specific guidelines for implementation. SAARC formation was in the background of hostilities between South Asian countries, asymmetrical economies, and several other challenges. The intra-regional integration within this region is very limited. TLP is a step in the right direction. In spite of this, the intra-regional trade is below 5%. To alleviate the situation, the tariff reduction agenda must be complied in the time bound manner. Integration at customs level in SAARC seems to be a distant milestone. However, harmonization of the common external tariffs may mitigate the complexities of the rule of origin. The major recommendations include moving towards a CU, adopting steps like elimination of tariffs and sensitive lists, reduction of NTBs by way of ensuring reporting, monitoring and eliminating NTBs, and moving towards a CET. Moreover, South Asian countries should come under the umbrella of harmonization of rules and standards under an MRA. Moreover, value chains can be established on a pilot basis. Other notable recommendations include promotion of intra-regional investment by pro-actively attracting flagship investors, facilitation of improved connectivity through experimental transit regimes based on corridor on a mutual basis, exploration of idea of joint borders with single clearance, promotion of service trade, and concentrate more on a liberal visa regime both the specialized category of people and general workers.
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