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| Economic horizons of SAARC in perspective | | | Dr. Rajkumar Singh | 2/10/2020 9:39:00 PM |
| On lines of European Free Trade Area (EFTA) and North American Free Trade Area (NAFTA), the concept of preferential trading within a group of countries emphasised which emerged in the creation of South Asian Preferential Trade Agreement (SAPTA) in 1995. The SAPTA was established in the hope that by the first decade of 21st century a South Asian Free Trade Area (SAFTA) would become a reality. A document to set up SAPTA was signed by the ministers of member countries on April 11, 1993 during a summit at Dhaka. It allowed member states to import commodities from one another with a 10 per cent lower tariff than those imposed on items from non-SAARC countries. Further with the setting up of World Trade Organisation (1995) the countries of the region were likely to face difficulty in having access to the developed world, which had been major trading partners of these countries. Keeping in view the upcoming challenges the SAPTA countries at their New Delhi meeting in December 1995 also exhanged lists of commodities for preferential trading in which India offered a list of 106 items, Pakistan 35 items, Nepal 14 items, Maldives 17 items, Bhutan 7 and Bangladesh 12 items for trade on concessional rates.
Distinctive contribution at regional level
About the period not only SAARC's working areas expanded but it also established links with extra regional actors. It officially reiterated its resolve to encourage and strengthen cooperation with other regions. The New Delhi Summit of 30 April 1995 underlying the resolve listed the progress made by the institution in establishing contacts and strengthening cooperation with the European Union (EU), ASEAN and Asian Development Bank (ADB). The Summit had felt the need that SAARC should explore the possibility of establishing cooperation with APEC, and keep itself abreast of developments regarding the Association of Indian Ocean Rim Countries (AIORC). In addition a large number of non-governmental institutions and networks have emerged. Among the most promising is the South Asia Regional Initiative / Energy (SARI/E), a $ 50 million project funded by USAID to enable energy cooperation between Bangladesh, India, and Nepal. Further the year 2005 has been fixed as a target to convert the preferential arrangement into one of free trade area.
Structural arrangements and institutional networking apart, the countries of SAARC have felt in recent Summits that to become a true regional bloc it has to focus on two things; security and economic development of the whole region. There is an impression among the people of South Asian nations that we have yet to make a distinctive contribution that can make a difference to lives of the people of the region. Security can not be effectively felt unless the region is free from terrorist and extremist activities. India is the most severely affected victim of terrorism as countries that are the hot bed of terrorist bases, Pakistan, Bangladesh and Nepal, surrounded it. It is putting pressures on the military and non-military resources of India. On the other despite efforts the intra-regional trade among SAARC countries is less than five per cent of the total trade while in comparison it is more than 20 per cent in East Asian countries. The main obstacle is security related but partly due to the fear that hangs over the minds of the SAARC countries that the Indian companies would dominate their domestic industries if the trade were made totally free. In today's world NAFTA, EU and ASEAN are the three strongest and successful regional blocks furthering prosperity and providing security to their people.
Developments during Summits
An important challenge for the countries of SAARC are the upliftment of rural people. As more than one billion citizens of SAARC countries live in villages, there is an urgency for all of us to improve the conditions of rural life through better physical connectivity, electronic connectivity, knowledge connectivity, which together will lead to comprehensive economic connectivity. The issue of connectivity was emphasised by the Indian Prime Minister Manmohan Singh at the 13th summit in Dhaka in November 2005 when he said, "Let us agree, at this summit, that all South Asian countries would provide to each other, reciprocally, transit facilities to third countries, not only connecting one another, but also connecting to the larger Asian neighbourhood, in the Gulf, Central Asia and in the South East Asia. India, which borders each of the members of the South Asia is willing to do so" Earlier when Atal Bihari Vajpayee, the Prime Minister of India, met with Musharraf during the January 2004 SAARC meeting in Islamabad, they held out the promise of expanded road, rail, and air contacts, people-to-people exchanges, a new look at regional economic cooperation and even a discussion on Kashmir. There is need of greater understanding and appreciation of each country's problems, accelerate economic growth and enhance self reliance and work to promote the welfare of the people of South Asia.
The latest and 14th Summit of SAARC held at New Delhi in April 2007 was the first after entering into the third decade of its existence and with the inclusion of Afghanistan as the 8th member of the organisation. Unlike the Dhaka Summit of 2005 it was significant because of the absence of acrimony, it however, witnessed a rigid attitude of Pakistani Prime Minister Aziz on the sidelines of SAARC. In the Summit, like earlier, India gave a positive signal and offered in the opening address of accepting asymmetrical responsibilities, opening her markets to her South Asian neighbours without insisting on reciprocity. It was because New Delhi had firm belief that time had come to move from a declaratory phase to action and implementation.
Prospective ways forward
The leaders at the Summit decided to make tangible progress in the next six months on four issues that affect their people's daily lives-water, energy, food and environment. During the meet two agreements-one on setting up a South Asian University in India and forming a regional food bank were signed in the presence of SAARC leaders. The declaration issued on the occasion emphasised the need at an early date, to develop a roadmap for a South Asian Custom Union and a South Asian Economic Union in a planned and phased manner. It wanted the implementation of the South Asian Free Trade Area (SAFTA) agreement launched earlier in January 2006, in letter and spirit. They were of the opinion that successful implementation of SAFTA will catalyse other areas of regional economic cooperation. On the occasion Li Zhaoxing, the Chinese Foreign Minister, who was attending the Summit in the capacity of an observer also hoped that all countries in the region would live in harmony and the regional grouping would play a bigger role in regional and world affairs. He also expressed China's readiness to discuss with SAARC the establishment of a cooperative mechanism to alleviate poverty and carry out a comparative study on poverty reduction models. Apart from China other observers of the Summit the United States, Japan, South Korea and European Union have welcomed the decision taken at the summit to promote regional cooperation in diverse fields. |
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