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Ensuring South Asian economic integration

Ensuring South Asian economic integration
Questions can be raised about India’s decision to boycott the SAARC summit scheduled at Islamabad in November this year. This is the first time that India has cancelled participation in regional group summit because of actions that it blames on Pakistan. The summit is supposed to discuss a large number of issues of interest to the South Asian region and it was just incidental that this time, the summit will be held in Islamabad. The decision on cancelling India’s participation was taken even before the discussions started about steps on reviewing MFN status for Pakistan following Uri attack.

India has conveyed to the current SAARC chair Nepal that increasing cross-border terrorist attack in the region and growing interference in the internal affairs of member states by one country have created an environment that is not conducive to the successful holding of the 19th SAARC summit in Islamabad in November and under these circumstances, India cannot participate. Following India’s decision to boycott the summit, four member countries –Bangladesh, Afghanistan, Bhutan, and Sri Lanka have decided to abstain from the summit. Now only Nepal and Maldives have to respond and Pakistan is the host. However, as per SAARC’s charter, if a member country is unable to participate in the summit, the summit cannot be held. So the Islamabad summit gets cancelled automatically. Latest reports indicate Pakistan has called off the Summit.

The Modi government cannot claim much more than a pyrrhic victory for the SAARC process getting derailed in this manner. With one-fifth of the world’s population, South Asia is home to two-fifth of the world’s poor. It has abysmally low infra-regional trade. SAARC was created precisely to work around bilateral tensions in the subcontinent, especially between its two biggest members, and to make for discussion on common issues such as trade, infrastructure, sustainable development, and poverty alleviation, that SAARC was set up.

The founding principle was that together, South Asia had a better chance of fighting its shared ills, an idea that held the group together for decades in the face of intermittent regional tensions.

SAARC was founded in Dhaka in 1985. Its Secretariat currently is based  in Kathmandu. The organisation promotes the development of economic and regional integration. It launched the South Asian Free Trade Area in 2006. SAARC maintains permanent diplomatic relations at the United Nation as an observer and has developed links with multilateral entities, including the European Union. However, the organisation continues to face many challenges.

It is dedicated to economic, technological, social, and cultural development emphasising collective self- reliance. In terms of population, its sphere of influence is the largest of any regional organisation: almost 1.5 billion combined population of its member states. In April 2007, Afghanistan became its eighth member.

The objectives of SAARC, as defined in its charter include Promoting the welfare of the peoples of South Asia and improve their quality of life; acceleration of economic growth, social progress and cultural development in the region by providing all individuals the opportunity to live in dignity and realise their full potential; promoting and strengthening collective self-reliance among the countries of South Asia; contributing to mutual trust, understanding and appreciation of one another’s problems; promoting active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields; strengthening co-operation with other developing countries; strengthening co-operation among themselves in international forums on matters of common interest; and cooperating with international and regional organisation with similar aims and purposes.

SAARC Preferential Trading Arrangements (SAPTA), which came into operations in 1995, heralds a new chapter of economic cooperation among the SAARC countries. It concretises the first step towards the creation of a trade bloc in the South Asian Region. Under the SAPTA mechanism, the SAARC countries, to begin with, have identified 226 items for exchange on tariff concessions ranging from 10 per cent to 100 per cent.

India has agreed to extend tariff concessions on 106 items, while Bangladesh has agreed to offer tariff concessions on 12 items, Maldives on 17, Nepal 14, Pakistan 35, Sri Lanka 31, and Bhutan 11. Out of 106 items offered by India for tariff concessions, 62 items would be for the least developed countries in the SAARC.

The South Asian Free Trade Area (SAFTA) agreement came into force on July 1, 2006. With this, the earlier SAPTA established in 1995 had paved the way to SAFTA. The South Asian developed countries are well endowed with labour and natural resources.

Further, with growing openness among themselves, higher production and expansion of labour, intensive exports, increased employment, increased wages and thereby helping in reducing poverty, the region is poised to play an important role in the growing international trade relations. IPA

(Views expressed are strictly personal.)
Harihar Swarup

Harihar Swarup

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