The China-backed agreement is seen as an alternative to the Trans-Pacific Partnership (TPP), a Washington trade initiative that no longer exists. “The economic benefits of the agreement may be marginal for Southeast Asia, but there are some interesting trade and customs dynamics for Southeast Asia,” said Nick Marro of the Economist Intelligence Unit (EIU). In total, about 36 per cent of trade in South Asia is non-preferential. On the other hand, ASEAN countries do not, on average, have import tariffs on 96% of products, which encourages greater intra-regional trade. Secondly, the region has been very adept at creating an increase in “para-rights”, which are tariffs applied only to imports and not to domestic production: in fact, tariffs under another name. In south Asia, such parametric tariffs have become ubiquitous in Bangladesh (additional tariffs, regulatory taxes), Sri Lanka (port and airport development tax, at a standstill) and Pakistan (regulatory tax, additional duty). These tariffs reinforce general protection, lack of transparency and dispersal of tariffs, as well as the general anti-export bias of trade regimes where they prevail. This paratarif phenomenon is not observed in most countries of the world, including ASEAN countries. Because of their lack of transparency, large countries have generally been able to maintain para-customs tariffs outside of free trade negotiations. In South Asia, SAFTA is the main free trade agreement in which they participate for several countries. Since tariffs are not part of the SAFTA negotiations, this undermines the free trade agreement.

If SAFTA is to be more effective, the two issues mentioned above must be addressed. There is a need to reduce sensitive lists of countries in a timely manner. This can be carefully calibrated taking into account revenues and short-term effects in the workplace, and items of exceptional interest may be discouraged from liberalizing tariffs (subject to a cap, for example). B 5% of fare lines). However, for the process to be credible, the timetable for the liberalization of tariffs by each country must be clearly articulated and respected, contrary to the current SAFTA process. Second, the issue of paratarifs needs to be addressed directly. A starting point could be to reduce and accelerate the removal of para-tariffs on items that are not on sensitive lists and to include para-tariffs in the SAFTA negotiations. Our report shows that intra-regional merchandise trade in South Asia can triple from the current $23 billion to $67 billion. Given the close links between trade and investment, a more efficient free trade system can also have ripple effects when it comes to attracting foreign direct investment, both domestically and externally. This trade and investment potential – which is not being exploited due to lower prices and a greater diversity of products, better qualities for producers and exporters, as well as expanded markets and job creation – lacks opportunities for South Asian countries to reach their doorstep.

The new free trade bloc will be larger than the agreement between the United States, Mexico and Canada and the European Union. Nepal imported 54,076 tonnes of palm oil from July to August and exported 35,706 tonnes to India during this period, according to the trade organization, referring to import data. However, it sets rules for trade that facilitate investment and other business in the area, said Jeffrey Wilson, research director at the Perth USAsia Center. The pact reduces tariffs, opens up the services sector and establishes common rules on trade within the bloc.