by Biman Mukherji
KATHMANDU, Jan 4 (AFP) — Indian business leaders Friday called for greater impetus towards free trade in South Asia despite mounting tensions between India and Pakistan.

Ahead of the delayed opening on Saturday of a seven-nation South Asian summit here, Federation of Indian Chambers of Commerce and Industry head R. S. Lodha told AFP the stakes in the poverty-hit region were too high to brush economic issues under the carpet.

"What has happened until now is that some progress has been made on trade, but that has been more symbolic than real," he said.

"But given the compulsion of economic globalisation, the influence being exerted by the World Trade Organization (WTO) and China’s entry into it, automatically means the time is coming for a strong unity.

"We expect in the next few years, a South Asian Free Trade Agreement to be a reality and a success," he said, dismissing the present Indo-Pakistan tensions as an aberration.

The South Asian Association for Regional Cooperation (SAARC) is still negotiating a preferential trade agreement, which is the forerunner to the free trade pact.

Three rounds of preferential trade talks have helped reduce taxes on over 5,000 commodities, but these are not the main export items of the member nations — Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.

Intra-SAARC trade has increased to just four percent from three percent of their combined trade with the rest of the world in the last two years.

Trade expansion has been hampered by inadequate infrastructure such as complicated regulations and poor road links which keep the volume of trade low despite high potential for cooperation.

Lodha said the traditional mistrust between India and Pakistan — the two most dominant countries of the region — was a political legacy that did not reflect the desire of traders in both countries to do business with each other.

Last August, the SAARC nations rallied together, including India and Pakistan, asking the WTO to check imbalances against developing countries.

Industry officials believe the forging of a common South Asian stance, as well as joining hands with other developing nations, helped them get far more at the recent Doha WTO ministerial meeting.

The poorer nations wangled concessions relating to vital sectors such as agriculture, textile exports and not linking the issue of labour and environment standards to trade.

The present restrictions between several SAARC members mean unofficial trade is sometimes six times greater than the official figure.

"Which South Asian country gains from that? It only means a huge loss of revenues," Lodha said.