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Economic Issues to Dominate South Asian Summit Talks

Leaders from seven South Asian countries will gather in Pakistan Sunday for talks aimed at signing a free trade agreement for the region. The debate at the summit of the South Asian Association for Regional Cooperation is likely to be divided between economic powers India and Pakistan and less developed members such as Bangladesh.

One of the main hurdles South Asian leaders must overcome before signing a free trade agreement is how to level the playing field between the region's economic heavyweights and its least developed countries, called LDC's.

Leaders of the South Asian Association for Regional Cooperation - SAARC - begin a summit meeting Sunday in Islamabad, their first gathering in two years. The agenda is dominated by economic issues, including the South Asia Free Trade Agreement, or SAFTA.

Without concessions, SAFTA would pit Bangladesh, Bhutan, Nepal and the Maldives against the economic strength of India, Pakistan and Sri Lanka. The four poorer SAARC members could lose out in trade with the three bigger economies.

Shyam Kapoor is India's Commerce Secretary.

"The point here is that LDC's claim that they have a very narrow export base and the structure of the economy is such that they don't have many products for export," he said. "So that could be taken into account when negotiating the sensitive list."

Once SAFTA is signed, the SAARC members will spend the next 12 to 18 months negotiating tariffs and exactly which products are to be kept protected.

Biswajit Dhar, with the Indian Institute for Foreign Trade, says it is important for the smaller countries to remember that they too have opportunities to exploit under SAFTA.

"I think there are interesting possibilities how certain areas in Bangladesh for instance, how they would react to Indian tariffs on textiles coming down, or certain other commodities," said Biswajit Dhar.

Indian Prime Minister Atal Bihari Vajpayee has said the SAFTA deal might pave the way for a common currency for South Asia. Although that might be years in the future, many regional political analysts say that if it is approved, SAFTA could be a sign that even greater economic cooperation is on the way.