[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Wednesday, 2 August 2006, 13:39 GMT 14:39 UK
Saarc defers free trade dispute
By Waliur Rahman
BBC News, Dhaka

Shops in Delhi
Pakistan says it is unable to gain entry into Indian markets
South Asian foreign ministers have agreed to defer a dispute between India and Pakistan over the implementation of a regional free trade agreement.

They ended their two-day meeting in the Bangladeshi capital, Dhaka, with a decision to refer the matter to a Saarc forum of commerce ministers.

The meeting however decided to include the US, South Korea and the EU as observers at future Saarc summits.

India has accused Pakistan of jeopardising the free trade agreement.

The South Asian Free Trade Area (Safta) agreement came into effect earlier this year.

Pakistan has had a very positive attitude from the very beginning and deeds speak louder than words
Khursheed Kasuri
Pakistan foreign minister

But Delhi says Islamabad has failed to implement key tariff reductions for goods imported from India when it issued a notice last month limiting Safta tariff concessions.

"When you enter into a contract you enter into an obligation, and that obligation has to be fulfilled," junior Indian Foreign Minister E Ahamed said.

"The notification issued by Pakistan is a negation of the contract."

'No access'

But the Pakistani Foreign Minister, Khurshid Mahmud Kasuri, said there was a reason for treating India differently under the free trade area deal.

He said while Indian exports to Pakistan have increased by about 400%, Pakistan failed to manage entry into India's market, even in areas where the country has a competitive edge.

"So we needed to look at this and we looked at it holistically. Pakistan has had a very positive attitude from the very beginning and deeds speak louder than words," he said.

Bangladesh Foreign Minister Morshed Khan said South Asian trade ministers would try to resolve the issue in their next meeting and would report to the heads of the governments during their next summit in Delhi early next year.

Can Saarc come of age?
11 Nov 05 |  South Asia
India offers any date for Saarc
24 Apr 05 |  South Asia
South Asian summit hopes
02 Jan 04 |  South Asia

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific