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SAARC and South Asian Economic Integration

Economic integration in south Asia has remained a non-starter even after 22 years of the South Asian Association for Regional Cooperation. The misplaced and exaggerated security concerns of India and Pakistan are a huge hurdle. The emphasis in these countries needs to shift from state security to human security.


SAARC and South Asian Economic Integration

Sing for economic integration. It is a huge contiguous land mass criss

Economic and Political WeeklyApril 7, 20071239agenda of SAARC, and based on discus-sions and negotiations in this forum, con-crete schemes. legal instruments, declara-tions and decisions have been adopted.The following are some examples:–The SAARC food security reserve;–Agenda of action for poverty eradication;–Programme for disaster management;–Conventions on suppression of terrorism,drug trafficking and trafficking in womenand children;–Declaration on the girl child; and–The SAPTA and SAFTA.But all of these were agreed upon asthough with the intention not to let themwork. They were announced with greatfanfare and made newspaper headlinesbutsubsequently they were deliberatelyallowed to languish or run a long tortuouscourse along which no progress waspossible.SAARC was presented with a vision inthe report submitted to the summit in 1998by an eminent persons’ group (EPG). Thereport projected the vision of south Asiamarching towards an economic union by2020 via the route of SAFTA to be accom-plished by 2010, and a south Asian cus-toms union by 2015. The EPG also elabo-rately laid out the roadmap for realising thevision. But the heads of state/governmentof SAARC countries did not share this visioneither in the form of a separate documentor as a part of the declarations adopted bythem since 1998. There was, therefore, noquestion of their adopting a roadmap ora time frame for reaching the goal.If we look at the course of SAARC overthe last 22 years, it seems that the memberstates never intended to achieve marketintegration or deploy the mechanism ofregional cooperation for bringing prosper-ity to the region and enhancing the welfareof their people. Most of the decisions madeand schemes launched were in the natureofa public relations exercise to outsmart eachother with a view to impressing the outsideworld and hoodwinking the people ofthe region. The SAARC process has thusbeen an exercise in competitive deception.The SAARC member states have optedfor organising events like SAARC carrallies, SAARC sports meet, SAARCarchaeological congress, etc, that catchnewspaper headlines but which have onlyone-time ephemeral significance. Theyhave established institutions, particularlyregional centres, for which a lot of creditwas taken when they were launched, butwhich languished for want of financialsupport. Now the latest in this series ofone-time wonder is going to be the decisionlikely to be taken at the 14th SAARCsummit, to establish a South Asian Uni-versity. This is supposed to be an Indianinitiative. India is, therefore, spearheadingthe process and would like to take thecreditfor it. One would wish this proposed uni-versity to become a reality and developintoa centre of excellence in the region. How-ever, going by the experience of the past,this institution is also likely to languish forwant of support from the member states.Why has regional integration in southAsia remained a non-starter? There areseveral reasons for it. Firstly, because ofpolitical differences, the member coun-tries have simply refused to play even thepositive-sum games, lest such moves ben-efit the other party. There is a tendency tomake things deliberately difficult forneighbours in order to strike an undefinedand undefinable future bargain. One of themember countries, Pakistan, wants to useits non-participation in any positive-sumgame with India as a leverage for solvingtheKashmir problem. It has consciously de-cided to maintain a distance from India asa means of resolving this issue in its favour.This is in spite of the fact that the pursuitof this self-defeating policy for the last 60years, has not yielded any positive results.Misplaced Security ConcernsThe second reason is that the membercountries, particularly India and Pakistan,have allowed progress in their bilateralrelations and in SAARC to be held hostageto their misplaced and exaggeratedsecurityconcerns. They have thus allowed theirobsession with state security to prevailoverhuman security. That is why these coun-tries are not allowing people, ideas andnews to move freely across their borders.Another reason for the failure of theSAARC countries to move towardsregional integration is the refusal of thelarger countries of the region, particularlyIndia, to discharge the responsibility thatdevolves upon them for ensuring thesuccess of the regional integration arrange-ment. Experience shows that regionalintegration, particularly among develop-ing countries, can succeed only if theeconomically stronger member states adoptmeasures for enabling the weaker memberstates to derive equitable benefits from theintegration process. The first wave ofregionalism among developing countriescollapsed mainly because of the non-compliance by the economically strongermember states with the provisions in therelevant regional trading arrangements forthe adoption of special measures in favourof the lesser developed member countries.On the other hand, the adoption of suchmeasures has been one of the principalfactors accounting for the success of re-gional integration among developed coun-tries, particularly the European Union.Under the EU, a fund was created to assistthe newly admitted lesser developedmembers like Spain, Portugal and Irelandto come closer to the levelofdevelopmentof the more developed member states. Thesize of resources allocated under this fundwas quite substantial, amounting to 3 to5 per cent of the gross national productof the lesser developed country concerned.This facility has been extended to the eastEuropean countries which have recentlybeen admitted to the EU. For example,Poland has been allotted a sum of $27billion over the next three years formodernising and diversifying its economy.For the least developed SAARC coun-tries, the mere extension of duty free accessinto the markets of the more developedmember countries is not enough. This isbecause of a supply constraint, the formercannot take full advantage of free trade.The EPG had recommended the creationof a large size fund for the purpose ofenhancing the export production capacityof the least developed member countriesof the region. SAFTA makes no suchprovision nor has there been any mentionof this idea in any of the declarationsadopted by the heads of government/stateof the SAARC countries.There is a very strong case, both oneconomic and political grounds, for Indiato extend unilateral duty-free and quota-free access to its market for products fromthe least developed countries of the region.This really involves extending such treat-ment to only Bangladesh, as there arealready unilateral free trade arrangementsin place with Nepal and Bhutan. Such amove by India, in addition to contributingto the expansion of Bangladesh’s exports,is also going to redound to India’s benefit.For, in a free trade situation, a sizeable partof the increase in Bangladesh’s exportearnings is bound to be spent on largerimports from India. Besides, this will alsobe in keeping with the moral obligationthatmore advanced among developing coun-tries, like India and Brazil, have assumedunder one of the early harvests of the Doharound at the Hong Kong ministerial meet-ing of WTO. In Hong Kong, “developedcountry members and developing country

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