Leaders of seven South Asian nations will start a summit meeting in Islamabad today to clear the way for a free-trade accord and boost economic growth in a region that is home to half the world's poor.
Leaders of the South Asian Association for Regional Cooperation, or SAARC, are gathering after a gap of two years because tension between India and Pakistan, which account for four-fifths of South Asia's US$650 billion economy, forced a postponement of the summit in January last year. The grouping also includes Sri Lanka, Nepal, Bangladesh, Bhutan and Maldives.
The three-day summit, the 12th such meeting, will also provide a platform for India's Prime Minister Atal Bihari Vajpayee and Pakistan's President Pervez Musharraf to re-open dialog on issues such as the dispute over Kashmir and improve relations after the two nuclear-armed countries came close to their fourth war in July last year.
"There is a growing realization in South Asia that they have to integrate economically -- it's a question of survival," said Ajai Sahni, director of research group Institute of Conflict Management in New Delhi.
"The short term will be dominated by the hangover of politics. Eventually all will fall in line and sign the accord," Sahni said.
The grouping was formed in 1985 with the stated aim of turning the region into a free-trade area. Trade among the seven countries, home to more than 1.5 billion people, is US$4 billion annually, and may more than treble to US$14 billion if restrictions are removed, the Federation of Indian Chambers of Commerce and Industry estimates.
A free-trade accord may be possible at the summit with foreign ministers of the seven countries having reached agreement in preliminary meetings in Islamabad.
Pakistani Foreign Minister Khursheed Mehmood Kasuri said that under the agreement, the developing members of SAARC -- Pakistan, India and Sri Lanka -- would cut tariffs to between zero and five percent within seven years of the start of the agreement.
The region's least developed states -- Bangladesh, Nepal, Bhutan and the Maldives -- would reduce tariffs to between zero and five percent within 10 years of the start of the agreement.
But, each member state will be allowed to maintain a list of sensitive products on which tariffs will not be reduced. The list will be finalised between now and the date on which the South Asian Free Trade Area (SAFTA) agreement is expected to come into force, Kasuri said.
Intra-Asean trade makes up 63 percent of Southeast Asia's trade, while trade among EU nations account for two-thirds of the trade of member countries.
Trade among South Asian countries, 70 percent dominated by India, is barely 5 percent of the region's total trade.
"The free-trade agreement is the main issue during the summit," said Masood Khan, Pakistan foreign ministry spokesman.
"It will not only give a new life to Saarc, but also provide an opportunity to India and Pakistan to have a closer cooperation," Khan said.
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