In the absence of details, it is difficult to judge how important the items counted in for tariff reduction are. But it is known that garments, in which Sri Lankais more competitive than India, have been kept out of the accord. Both countries will maintain a negative list--identifying items not covered by exemptions. The two countries have thus focussed on removing what are called unnecessary restrictions and have conceeded that necessary restrictions must continue. This is the nub of the problem. Can India courageously do away with necessary restrictions vis-a-vis the Saarc countries? Consider the facts. In April-September of 1997-98 and of 1998-99, India's exports to Sri Lanka were $200 million-plus and imports from it were $15 million-plus. (Or take Indo-Bangladesh trade. During April-September of last year and of this year, India's exports were $320 million-plus and imports $25 million-plus). Doing away with unnecessary restrictions will not boost bilateral trade nor impart a reasonable balance to bilateral economic relations. There must be a qualitative upgradation of bilateral trade. India must take the lead in getting necessary restrictions out of the way tomake the free trade area a reality.

Our small neighbours must have free access to India. Sri Lanka and Bangladesh need a hinterland. Bangladesh gave up west Pakistan's market-- that was the price it paid for independence, but failed to get a helping hand from India. Since foreign policy is the driving force for improving economic relations with neighbours, India needs to seriously introspect. It must get to the fundamentals of a customs union instead of bickering over rules of country of origin for permitting exports by neighbours into this country.