UNDP that released the report, Integration of Least Developed Countries (LDCs) into the South Asian Free Trade Agreement (SAFTA), in the wake of the sixth SAFTA Ministerial Council (SMC) meeting in the Pakistan has said that the region´s main weakness is LDCs poor supply capacity. [break]
The report looks at trade through human development perspectives and says, “The LDCs in the region suffer mainly because of their weak capacity and inefficiency to penetrate the huge market of the region - India.”
It notes that nature of supply-side constraints vary from country to country. “LDCs are handicapped by their own structural constraints like vulnerability of external shocks, geographic constraints, such as landlockedness, inadequate infrastructures, lack of human capital, limited access to credit and virtual absence of trade facilitation measures,” the report said.
Among others, the report cites poor transit and transport connectivity as major factors affecting LDCs, including for Nepal. “Landlocked LDCs face several barriers to transit because of their high dependence on their transit providing country, instability and complex administrative procedures,” states the report.
LDCs including Nepal, Bhutan, Afghanistan, Bangladesh and Maldives have to rely on India and Pakistan for their imports and exports. The report also underscores the fact that 99 percent of the total regional trade is solely dependent on India and Pakistan.
The report, which discusses the regional trade from the SAFTA framework, also includes the impact of emerging India´s international trade, especially its ties with Europe. “Nepal and Bhutan will suffer most from the Indo-EU FTA,” the report reads.
“57.5 percent of trade in the case of Bhutan and 27 percent in the case of Nepal will be affected by the Indo-EU FTA.” The Indo-EU FTA is in the process to be signed though it has not moved ahead due to intense protests from Indian manufacturers.
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