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South Asia agrees on trade deal

Sinha, left, jokes with Pakistan counterpart Kasuri, right. At center is Morshed Khan of Bangladesh.
Sinha, left, jokes with Pakistan counterpart Kasuri, right. At center is Morshed Khan of Bangladesh.

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ISLAMABAD, Pakistan (Reuters) -- Foreign ministers from South Asia have agreed to create a regional free trade area, a deal that India says will help improve ties with bitter rival Pakistan.

The deal, reached on Friday, augurs well for Saturday's visit of Indian Prime Minister Atal Behari Vajpayee to the Pakistani capital.

His visit comes less than two years since the nuclear-armed rivals came perilously close to war.

"I have no hesitation in saying that (the) Islamabad summit is indeed going to be an extremely successful summit ... a historic one because we will be adopting or signing an agreement on free trade,'' Indian Foreign Minister Yashwant Sinha told a news conference Friday.

Sinha also highlighted a deal on measures to fight terrorism and on a social charter meant to raise living standards in the seven-nation South Asian region, where nearly a quarter of the world's people live on an average income of $450 a year.

The foreign ministers from the South Asian Association for Regional Cooperation, or SAARC, are meeting in the run-up to a three-day summit of heads of government beginning Sunday.

• Timeline: Kashmir history
• In-depth: Where conflict rules

"A successful SAARC summit has the potential of rubbing off on all bilateral relationships including the relationship between India and Pakistan,'' Sinha said.

As the meeting opened, India and Pakistan's foreign ministers greeted each other with a warm embrace. It was their first meeting since the middle of 2002.

Sinha and Pakistan's Mian Khursheed Mehmood Kasuri posed for the cameras smiling, and each with an arm around the other's back.

Speaking to reporters with Kasuri at his shoulder, Sinha did not rule out ice-breaking, one-on-one talks between Vajpayee and his Pakistani counterpart Zafarullah Khan Jamali or President Pervez Musharraf on the summit sidelines.

"We have said that it has not been decided yet,'' he said before the meeting. "Let the prime minister come tomorrow.''

Sinha said the leaders would in any case be meeting at the summit. "They will be meeting socially,'' he said.

Discussion of bilateral issues at the SAARC summit is forbidden by its charter, but Musharraf and Vajpayee may use the occasion to advance the shaky reconciliation process.

At best, diplomats say, there is a chance the two sides might quietly agree to open lower-level dialogue between foreign ministry bureaucrats.

In an interview published Friday, Vajpayee said he was optimistic the dispute could be solved in his lifetime, but only if Islamabad gave up its insistence that Kashmir belonged to Pakistan because of its Muslim majority.

"I remain optimistic about it. But there has to be a fundamental change in Pakistan's perspectives,'' he said. "Until it changes its perception about Jammu and Kashmir ... no meaningful discussions can take place on this matter.''

India and Pakistan resumed commercial flights between their two countries on Thursday after a break of two years. (Full story)

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