SAARC: SECRETARIAT COMMENTS ON LATEST COUNCIL FOR

C O N F I D E N T I A L KATHMANDU 002158

SIPDIS

E.O. 12958: DECL: 11/04/2007
TAGS: ECON NP XD
SUBJECT: SAARC: SECRETARIAT COMMENTS ON LATEST COUNCIL FOR
ECONOMIC COOPERATION

Classified By: Classified by Ambassador Michael Malinowski, Reason 1.5(
d)

Summary
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1. (C) On November 14, the Economic Officer met with Rajiv
Chander, Director of Trade Economic and Transportation
Division of the South Asia Association for Regional
Cooperation (SAARC) and an Indian national, to discuss the
recent meeting of the Committee on Economic Cooperation
(CEC). Mr. Chander did not see evidence of Indian demands on
Pakistan during the CEC proceedings. Although India and
Pakistan did not agree to any trade preferences at the
session, Mr. Chander saw progress through a commitment for
representatives to meet late November, and perhaps again in
December, to finalizing the South Asia Free Trade Area
framework for presentation in January. The Secretariat is
also prepared for the Twelfth Summit as scheduled and making
provisions for postponement, rather than a cancellation.

Accomplishments
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2. (U) On November 14, the Economic Officer met with Rajiv
Chander, Director of Trade Economic and Transportation
Division of the South Asia Association for Regional
Cooperation (SAARC) and an Indian national, to discuss the
recent meeting of the Committee on Economic Cooperation
(CEC). The CEC, made up of the Commerce or Trade Secretaries
of the member states, met for the eleventh time in Kathmandu
from October 26-27. The CEC concluded the fourth round of the
South Asia Preferential Trading Arrangement (SAPTA),which
will be implemented in six months; set dates for the
preparation of the South Asian Free Trade Area (SAFTA)
tentatively scheduled for the end of November; and set Dhaka
as the host for the fifth SAARC Trade Fair.

Indo-Pak Discussions
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3. (C) During the CEC discussions, Pakistan and India were
unable to come to any agreement on trade concessions under
the SAPTA framework. Mr. Chander did not participate in the
bilateral meeting, but he did not see the Indian delegation
present any preconditions for Indian participation in the
January Summit. He views the commitment to meet at the end of
November to finalize SAFTA as a positive sign. The CEC
members also committed to a follow-on meeting in December to
finalize the effort. (Comment: If press reports on New
Dehli's statements are accurate, the Prime Minister has
demanded Pakistan grant India Most Favored Nation Status as a
sign of progress in economic cooperation and a condition for
Indian participation in the Twelfth SAARC Summit. While these
statements were not reiterated in Kathmandu, it is possible
that progess on SAFTA may substitute for demands made on Most
Favored Nation Status.)

Prospects for the Twelfth SAARC Summit
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4. (C) The Secretariat is fully prepared for the Summit as
scheduled. Provisions are being made for a delay in the
proceedings, but not for their cancellation. Mr. Chander did
not see this period as a return of the "dark days of SAARC,"
the period from 1999 to 2001 when no summit took place due to
Indo-Pak bilateral tensions. Rather, he believes that
postponement of the proceedings is more likely, with the
Secretariat is already making provisional plans for just such

SIPDIS
a contingency. Other activities of the SAARC technical
committees continue, including the development of a
agriculture program and a forum discussing the impact on
South Asia with the sunset of the Multi-Fiber Arrangement in

2005.

Comment
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5. (C) Despite Mr. Chander's position as facilitator during
the recent CEC meeting, he was unwilling to provide a candid
view of the Indo-Pak bilateral relationship. This falls in
line with the Secretariat's unassertive stance on bilateral
issues, which it defines rather broadly. SAARC continues to
present opportunities for bilateral dialogue for all member
states, particularly India and Pakistan. However, it lacks a
recognized role as a mediator and does not have a history of
holding member states to prior agreements as a condition for
future talks.
MALINOWSKI