SAARC members to pen deal on service sector in next summit

Nazmul Ahsan

The seven member countries of SAARC are likely to ink a deal on trade in services in the upcoming SAARC summit to be held in the Maldives in next April after an expert committee has recently okayed the draft agreement, trade officials said.

The proposed agreement, styled 'SAARC Agreement on Trade in Services' has, however, excluded the procurement of services by the governments and all kinds of airlines related service business from the purview of sectors covered by the proposed trade pact.

The agreement will follow the formula of positive list approach in opening up markets to each other for trade in services, contrary to the negative list method now being practiced for trade in goods under the South Asian Free Trade Area agreement, according to the final draft on trade in services.

The next (Sixteenth) SAARC summit will be held in the Maldives. Bangladesh, Afghanistan, Bhutan, Nepal, India, Sri Lanka, Pakistan and the Maldives are the member countries of SAARC.

"The draft agreement on trade in services has been okayed at the recent expert level meeting, held in Katmandu, Nepal, ending the three-year long negotiation among SAARC member countries," a top commerce ministry official told the FE.

"The draft agreement would soon be sent to the Cabinet Division for approval."

Enhancing investment in service sector among regional countries and increasing local competitiveness and expertise in service-oriented business, are some of the factors that inspired the policymakers to strike the proposed deal with South Asian economies, trade officials said.

Besides, striking such a deal is also a political decision, they added.

However, a Ministry of Commerce (MoC) official said the government must be careful at the time negotiation for opening up the service sector.

He said a liberal approach in opening up country's service sector might cause harm to local service sectors such as practice of physicians, advertising, film and entertainment and publication industry.

According to the negotiated draft, service business in the areas of government procurement, transportation and non-transportation air services, aircraft repair and air transport services, selling and marketing of air transport services and computerized reservation system services have been excluded.

The agreement will be signed for three years with a provision for renewing the pact.

The draft agreement said the SAARC member countries will recognise the education or experience obtained or licences or certification obtained in any of the member countries.

Officials in the MoC said the agreement on trade in services will pave the way for foreign investment in service sector in Bangladesh and increase competitiveness in local service industry.

The draft said the Contracting States will review the treatment of subsidies provided to service sector when relevant disciplines are developed by the World Trade Organisation.

The member countries of the agreement are not allowed to discriminate among the Contracting States in terms of doing or allowing business, while the members of the proposed trade pact will avoid unnecessary damage to the commercial, economic and financial interests of other contracting states, the negotiated draft said.

The Contracting States will provide cooperation to each other in the areas like development of regulatory capacity, extending cooperation for collection and exchange of statistics and regulations and cooperation in WTO negotiation, added the draft.

The proposed agreement has provided a number of flexibilities for least developed member countries.