Copy of Final-SAARC

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SAARC: South Asian Association forRegional Cooperation

Making Regional Trade AgreementsWork in South Asia


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Contents

Introduction and Background Information

Objectives

How far has SAARC Progressed?

Trade and economic cooperation

Why SAARC is a disappointment?

How to Make SAARC Work

Conclusions


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Introduction and BackgroundInformation

The South Asian Association for RegionalCooperation (SAARC) was established inDecember 8, 1985

Members

Evolution

Meetings


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An economic and political organization of eightcountries - Bangladesh, Bhutan, Maldives, Nepal,

Pakistan, India and Sri Lanka, Afghanistan

Members Observers


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Objectives

SAARCs mission is to accelerate the process ofeconomic and social development of memberstates

To contribute to mutual trust, understanding andappreciation of one anothers problems.

To promote active collaboration and mutualassistance in the economic, social, cultural,technical and scientific fields


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To strengthen cooperation with other developing

Countries.

To strengthen cooperation among themselves in

International forums on matters of commoninterests

To cooperate with international and regionalOrganizations with similar aims and purposes

Objectives


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How Far Has SAARC Progressed?

Summits have taken place focusing onexpanding and strengthening the regionalcooperation

Several ministerial level meetings have taken

place to give due emphasis in various fields


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Creation of food bank holding reserves 241,000

tons of rice and wheat for security reasons

Antiterrorism police force set up in Pakistan

South Asian Free Trade Agreement (SAFTA)

How Far Has SAARC Progressed?


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Trade and Economic Co-operation

In 1991, a Regional Study on Trade,Manufactures and Services (TMS) was

completed.

The Council of Ministers at its Ninth Session inJuly 1991 decided to set up a high-levelCommittee on Economic Cooperation (CEC)


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The Council of Ministers at its FifteenthSession agreed that the full and timelyrealization of the benefits of regional economiccooperation required

a) the implementation of trade control barrierswithin the specific timeframes and

(b) eventual progression to the creation of a free-trade area in the region.



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The following initiatives have also been taken

towards promoting trade cooperation within the

region:

i) Cooperation in the field of Handicrafts andCottage Industries

ii) Study on Transport Infrastructure and TransitFacilities



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Why SAARC Has Been aDisappointment

SAARC is ineffective due to conflicts between itsmembers and a lack of progress madecompared to other regional organizations suchas ASEAN

Pakistans political instability

Nuclear arms race and Kashmir conflict betweenIndia and Pakistan

Main challenge facing SAARC today how tomake it effective and action oriented


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Why SAARC Has Been aDisappointment

Social indicators

- Poverty, education, natural disasters, Indiasworkforce size

Political factors

- India and Pakistan, systemic differences andmilitary conflict

Economic factors

- Ineffective trade, GDP imbalance, tradeimbalance


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Social Indicators: Education

Low education level in some countries is leading to alack of development

Gaps between enrolment and completion of education

Literacy rate, adult total (% of population)

0.00

20.00

40.00

60.00

80.00

100.00

India

Pakis

tan

Nepal

Mald

ives

Bhutan

B

angla

desh

SriL

anka

A

fgha

nista

n


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Social Indicators: Indias

Workforce

Labour force of India is much larger thanother SAARC members, therefore tradeagreements would be in favour of India

Labour force, total

050,000,000

100,000,000150,000,000200,000,000

250,000,000300,000,000350,000,000400,000,000450,000,000500,000,000

India

Pakis

tan

Nepal

Maldi

ves

Bhutan

Ban

glade

sh

SriL

anka

Afgh

anist

an


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Political Factors: India and Pakistan

India and Pakistans relationship is tense

- differences in foreign policies and differentpolitical systems

- Indias foreign policyis focused on

self-reliance

- Pakistans foreignpolicy is outward

oriented

- Kashmir conflict

- nuclear arms race


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Political Factors: SystemicDifferences and Military Conflict

Pakistans political instability

- Benazir Bhutto and Musharraf

Different political systems

- Democracy, military dictatorship, Buddhistmonarchy, transitional democracy

Political tensions due to harbouring terrorists

Indias disputes with other SAARC members

Nepal and Maoist rebels

Tamil Tigers in Sri Lanka


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Economic Issues: GDP Imbalance

India is by far the largest economy in SAARC,which skews the regional relationships in itsfavour

Despite this, SAARCs total GDP comprises lessthan 1/20th of theworlds GDP

GDP (thousands US$)

0

100000000

200000000

300000000

400000000

500000000

600000000

700000000

800000000

900000000

1000000000

2001 2002 2003 2004 2005 2006

India

Pakistan

Nepal

Maldives

Bhutan

Bangladesh

Sri Lanka

Afghanistan


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Economic Issues: Ineffective Trade

Trade between Pakistan and India is currentlyrouted through Dubai

SAFTA will allow formal trading relationship

between Pakistan and India without third partyinvolvement

Landlocked regions lack of resources and lack

of access to markets Member states producing substitute goods,

reducing impetus to trade amongst each other


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Use SAARC as a social tool to solve regionaldisputes before tackling economic problems

Establish political stability first, then developcommon economic policies and regionalstandards

Find ways to offset Indias large size and itsinfluence on SAARC

More action, less talk


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If SAARC cooperates, FDI will be increased,reducing poverty and hardship.

Improve infrastructure and increaseexpenditures on infrastructure,especially inremote areas like Nepal and Bhutan

Natural disaster aid efforts can provideopportunities for regional cooperation


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Country # Products Depth ofconcessions

Bangladesh 572 10% -15%

Bhutan 266 10-20%

India 2402 10-100%

Maldives 390 5-15%

Nepal 425 10-15%Pakistan 685 10-30%

Sri Lanka 211` 10-75%

TOTAL 4951


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