SAARC is still far away from its stated goals
Monday, 3 May 2010
THE 16th summit meeting of the South Asian Association for Regional Cooperation (SAARC) has ended amid the usual pageantry in the Bhutanese capital, Thimpu. The SAARC was founded in 1985 and, thus, the latest summit also marked the silver jubilee of this organisation. Indeed, SAARC has matured into a regional organisation of some significance and actual attainments over these years. However, like in the just-ended summit at Thimpu, SAARC has remained largely restricted to discussing its great potentialities by its leaders at their annual summits than taking hard steps to achieve the same.
Regional organisations are formed mainly by their member countries to get access to far bigger regional markets. This, in theory, at least, helps out every member country to mobilise and employ their resources and people to sell in the bigger market. Therefore, opportunities occur for the member countries in varying degrees to improve their external trade and to attract internally greater investments into income generating production activities to feed that external demand. Thus, all members of a regional grouping or their economies can expect economic gains from the flourishing of such a grouping.
The SAARC countries are home to some 23 per cent of the entire global population. Thus, numerically it has the prospect of becoming the biggest common market in the world as the combined growth rate of the populations of SAARC countries is the highest in the world. One may contend that the modest purchasing power of the poor among the SAARC population restricts its real market size. But in all SAARC countries the sections of the rich, upper middle classes and the lower middle classes are fast rising. They already form a vast market for all kinds of goods and services and their numbers are almost certain to only go on increasing even in the near future despite the hurdles. There is already a very big SAARC market and its size is only likely to expand to an enormous one in the mid- and longer-terms.
But the sad reality at the moment is that SAARC countries are only tinkering at the edges of exploiting this present and potential markets. Although SAARC was established a quarter of a century ago, intra-regional trade or SAARC trade between the member countries themselves, constitutes a small fraction of their total trade. The bulk of their trade is with countries outside the SARRC. But intra-regional trade, even at the present level of various capacities within SAARC, could be several fold larger than what is today. Of course, that requires the SAARC countries to meet the goals of the South Asian Free Trade Area (SAFTA) which they formed in 2006. But SAFTA has hardly made any substantive progress since its founding. It remains practically stagnant as SARRC countries are yet to take the necessary initiatives to give a spur to it. With the large lists of sensitive products of every SAARC country which are protected relatively by high tariffs and other disincentives, most members of the South Asian grouping are not actively promoting free trade. It is notable that SAFTA was only peripherally discussed at the recently-concluded Thimpu summit. Hence, the relevance of the new SAARC accord on trade in services to the ground-level realities remains in doubt.
In this context, it is imperative that the SAARC leaders start appreciating the pressing need of doing at the fastest what things need to be done to turn this body dynamic — particularly in the economic sense –– and to kick-start the process of collective economic advance of the countries within its fold. If the member-countries of SAARC would have taken the right pro-active measures to promote intra-regional trade and trade-related investments, the economic scenario in South Asia could have been much different from what is today.
Regional organisations are formed mainly by their member countries to get access to far bigger regional markets. This, in theory, at least, helps out every member country to mobilise and employ their resources and people to sell in the bigger market. Therefore, opportunities occur for the member countries in varying degrees to improve their external trade and to attract internally greater investments into income generating production activities to feed that external demand. Thus, all members of a regional grouping or their economies can expect economic gains from the flourishing of such a grouping.
The SAARC countries are home to some 23 per cent of the entire global population. Thus, numerically it has the prospect of becoming the biggest common market in the world as the combined growth rate of the populations of SAARC countries is the highest in the world. One may contend that the modest purchasing power of the poor among the SAARC population restricts its real market size. But in all SAARC countries the sections of the rich, upper middle classes and the lower middle classes are fast rising. They already form a vast market for all kinds of goods and services and their numbers are almost certain to only go on increasing even in the near future despite the hurdles. There is already a very big SAARC market and its size is only likely to expand to an enormous one in the mid- and longer-terms.
But the sad reality at the moment is that SAARC countries are only tinkering at the edges of exploiting this present and potential markets. Although SAARC was established a quarter of a century ago, intra-regional trade or SAARC trade between the member countries themselves, constitutes a small fraction of their total trade. The bulk of their trade is with countries outside the SARRC. But intra-regional trade, even at the present level of various capacities within SAARC, could be several fold larger than what is today. Of course, that requires the SAARC countries to meet the goals of the South Asian Free Trade Area (SAFTA) which they formed in 2006. But SAFTA has hardly made any substantive progress since its founding. It remains practically stagnant as SARRC countries are yet to take the necessary initiatives to give a spur to it. With the large lists of sensitive products of every SAARC country which are protected relatively by high tariffs and other disincentives, most members of the South Asian grouping are not actively promoting free trade. It is notable that SAFTA was only peripherally discussed at the recently-concluded Thimpu summit. Hence, the relevance of the new SAARC accord on trade in services to the ground-level realities remains in doubt.
In this context, it is imperative that the SAARC leaders start appreciating the pressing need of doing at the fastest what things need to be done to turn this body dynamic — particularly in the economic sense –– and to kick-start the process of collective economic advance of the countries within its fold. If the member-countries of SAARC would have taken the right pro-active measures to promote intra-regional trade and trade-related investments, the economic scenario in South Asia could have been much different from what is today.