August 3, 2008 (LBO) – Bhutan and Bangladesh, tried to fan the flame of free trade in South Asia as dismantling trade barriers went off the agenda, when leaders of seven nations that make up a South Asian regional grouping met in Colombo. The agenda of the South Asian Association of Regional Co-operation (SAARC) was dominated by calls for action against terrorism and ways to counter an oil and food commodity price bubble, the worst the world has seen since 1973.
Intra-regional trade in the grouping made up of Afghanistan, Bangladesh, Bhutan, India, Maldives Nepal, Pakistan and Sri Lanka is low largely due to high tariff barriers that block the movement of goods across the states.
Bangladesh first mooted the idea of a free trade bloc for South Asia as early as the 1970s, and after SAARC was created in 1985 the foundation for a preferential trade deal was laid in 1993.
In 2006 it was extended with a deal on the South Asia Free Trade Area (SAFTA) which is expected to bring down tariffs by a modest 20 percent, but it is loaded with a ‘sensitive’ or ‘negative’ list.
The ‘negative’ lists are in place to appease domestic producers who have long profited from selling goods to a captive domestic cust