Since signing the SAFTA agreement on January 2004, series of meeting have been held to finalise the annexes on the rules of origin, sensitive lists of products and the mechanism for compensation of revenue loss of LDCs. All the eight countries have reached a broad agreement on all issues, except for some unresolved aspects of the compensation mechanism.
To stimulate regional trade and to enhance market access, the SAFTA rules of origin has been lowered to 40% value addition for single country content with further 10% derogation for LDCs. As a wholly produced item, tuna exports do not require to qualify under the rules of origin.
As there are only few items (if at all) that can be domestically value added and supplied to the region, for the Maldives, there is limited scope for benefiting from the flexibility of the rules of origin. Given the inherent productive capacity constraints, SAFTA trade is not likely to lead to any significant increase in exports. However, the enhanced market access can be used to develop value added activities in future.
SAFTA is also not likely to alter the current pattern of exports of raw and processed tuna. The established markets for tuna are mostly non- SAARC countries with the exception of Sri Lanka, where there is a domestic market for dried fish. Unfortunately Sri Lanka has not allowed any bilateral concessions to Maldives under SAFTA by putting all the tuna items in its sensitive list
For the above reasons, immediate export prospects due to SAFTA is minimal due to limited basket of commodities traded and due to insufficient capacity for domestic value addition. However, when the non-LDCS reduce tariff to 0-5 % in 3 years, this is expected to lead to significant market opportunities in India and Pakistan for exporting Maldives tuna, but again, supply may be the constraint.
Click here to see the sensitive list
OIC - Trade Preferential System
The Framework Agreement on TPSOIC is the basic legal document of the TPSOIC, which sets up the general principles towards establishing a preferential system, such as the general rules of the negotiations, the scope of the goods coverage etc. The Agreement entered into force in the autumn 2002, after 10 OIC Member States ratified it.
Among the main features of the Agreement are the Most Favored Nation principle, equal treatment of member states, special treatment for Least Developed member states, and that it allows the regional economic groups, which consist of only OIC Member Sates, to participate in TPSOIC trade negotiations with a unified representation.