SAARC

SAARCIndia's trade relations

South Asian Association for Regional Cooperation

INTRODUCTION

The South Asian Association for Regional Cooperation (SAARC) is an economic and geopolitical organization of eight countries that are primarily located in South Asia.

The SAARC’s Headquarter is in Kathmandu, Nepal.

The SAARC policies aim to promote welfare economics, collective self-reliance among the countries of South Asia, and to accelerate socio-cultural development in the region.

The 11 stated areas of cooperation are agriculture; education, culture and sports; health, population and child welfare, the environment and meteorology ; rural development; tourism; transport; science and technology; communications.

OBJECTIVES OF SAARC

To promote the welfare of the people.

To accelerate economic growth, social progress and cultural development.

To Contribute to mutual trust, understand and appreciation of one another's problem.

To promote active collaboration and mutual assistance.

To strengthen cooperation with other developing countries.

To cooperate with international and regional organisations with similar aims and purpose.

The 18th SAARC summit is not yet happened it is going to be held in Nov 2014 in Kathmandu.

The SAARC Secretariat is supported by following Regional Centresestablished in Member States to promote regional cooperation. TheseCentres are managed by Governing Boards comprising representativesfrom all the Member States, SAARC Secretary-General and the Ministry ofForeign/External Affairs of the Host Government. The Director of theCentre acts as Member Secretary to the Governing Board which reports tothe Programming Committee.

SAARC Agricultural Centre (SAC), Dhaka SAARC Meteorological Research Centre (SMRC), Dhaka SAARC Tuberculosis Centre (STC), Kathmandu SAARC Documentation Centre (SDC), New Delhi SAARC Human Resources Development Centre (SHRDC), Islamabad SAARC Coastal Zone Management Centre (SCZMC), Maldives SAARC Information Centre (SIC), Nepal SAARC Energy Centre (SEC), Pakistan SAARC Disaster Management Centre (SDMC), India SAARC Forestry Centre (SFC), Bhutan SAARC Cultural Centre (SCC), Sri Lanka

Regional Centers

Observer & Potential Future

Observers

States with observer status include Australia, China, the European Union, Iran, Japan, Mauritius, Myanmar, South Korea and the United States.

On 2 August 2006 the foreign ministers of the SAARC countries agreed in principle to grant observer status to three applicants; the US and South Korea (both made requests in April 2006), as well as the European Union (requested in July 2006). On 4 March 2008, Iran requested observer status, followed shortly by Mauritius.

Potential future members

Myanmar has expressed interest in upgrading its status from an observer to a full member of SAARC. Russia has applied for observer status membership of SAARC.

Turkey applied for observer status membership of SAARC in 2012.South Africa has participated in meetings.

Organisational structurefor SAARC

The SAARC comprises following layers of organizational structure:1.Council

At the top, there is the Council represented by the heads of the government of the member countries. The council the apex policy making body. It meets once in 2 years time.

2. Council of Minister It is to assist the council. It is represented by the foreign minister of the

member countries. Its functions include: Formulation of policies Review of functioning Deciding new areas of cooperation Decide about general issues of common of interest of the SAARC member.

Organisational structurefor SAARC

3. Standing Committee It is comprised by the foreign secretariat of the member government. Its major

functions are: To monitor and co-ordinate the programs To determine inter-sectored priorities. To mobilize cooperation within and outside the region To deal with the modalities of financing.

4. Programming Committee:

It consist of the senior official of the member governments.

Its functions include:

Scrutinizing the budget of the secretarial.

Finalizing the annual schedule.

External activities assigned by the standing committee.

Analyses the respects of the technical committee.

Organisational structurefor SAARC

5. Technical Committee:

It consist of the represented of the member nations.

Its function are:

To formulate project and programmer

To monitor and execute the projects

To submit reports.

The Technical Committee convers the areas such as: Agriculture, Communication, Environment, Rural Development, Health and Population, Science and Technology, Tourism and Transport.

Organisational structurefor SAARC

6. Secretarial:

The SAARC secretarial is located in Nepal.

Its function include:

Coordination, execution and monitoring of SAARC activities

Servicing the SAARC meetings

Work as communication link between the SAARC and other international forum.

The secretariats is headed by the secretary-General appointed by the Council of Ministers. These are 8 Director (One from each member nation) and the general service staff.

SAARC Preferential trade arrangement(SAPTA)

In December 1991, the Sixth Summit held in Colombo approved the establishment of an Inter-Governmental Group (IGG) to formulate an agreement to establish a SAARC Preferential Trading Arrangement (SAPTA) by 1997. Given the consensus within SAARC, the Agreement on SAPTA was signed on 11 April 1993 and entered into force on 7 December 1995 well in advance of the date stipulated by the Colombo Summit. The Agreement reflected the desire of the Member States to promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of concessions.

The basic principles underlying SAPTA are:

Overall reciprocity and mutuality of advantages so as to benefit equitably all Contracting States, taking into account their respective level of economic and industrial development, the pattern of their external trade, and trade and tariff policies and systems;

Negotiation of tariff reform step by step, improved and extended in successive stages through periodic reviews;

Recognition of the special needs of the Least Developed Contracting States and agreement on concrete preferential measures in their favour;

Inclusion of all products, manufactures and commodities in their raw, semi-processed and processed forms.

Four rounds of trade negotiations have been concluded under SAPTA covering over 5000 commodities. Each Round contributed to an incremental trend in the product coverage and the deepening of tariff concessions over previous Rounds.

Top 20 commodities India export in SAARC

Is SAPTA helpful for trading in SAARC?

Is SAPTA helpful for trading in SAARC?

Is SAPTA ineffective ?

With comparing other trade block regions SAARC is least successful region.

Even after implementing so many policy under SAPTA trading is not that easy within region.

Major reason for this failure is political conflicts between India & Pakistan.(only 600 commodities exchanged)

Sea Boarder issues of India- Pakistan & India – Maldives.

Dominance of India In SAARC as being physically connected to all member countries (except Afghanistan ) .

In addition the member countries do not have significant potentialities for trade. (similar natural recourses , least develop countries , low service trade , etc)

SAARC FDI

& INDIA

Intra-Regional FDI

Bangladeshi and Maldivian ventures in India are in trade and distributionsectors.

The Sri Lankan firms are in a wide range of activities, with textile andgarments dominating the product mix. During the past decade a numberof clothing producers in Sri Lanka, including the two largest producers inthe country, MAS Holdings and Brandix , have set up production bases inIndia.

India was by far the largest regional investor in Bangladesh accountingfor 14% of total number of firms, 4.5% of total cumulative plannedinvestment and 17.8% of total employment.

Intra-Regional FDI

The industry profile of Indian investment in Sri Lanka is highly diversified,encompassing steel, cement, rubber products, tourism, computer software,IT-training and other professional services, and hotels and tourist resorts.

According to the data on cumulative foreign investment in Nepal as at 2011,intra-South Asian invests account for 26% of total foreign-invested firm, 41%of employment in these firms and 48% total cumulative investment. India isby far the largest source country, followed by Bangladesh, Pakistan andSri Lanka, and Bhutan in that order.

In Bhutan India is believed to be the largest investor, with investment predominantly in hydropower.

In Maldives, Indian firms seem to have a significant involvement in tourist resorts and hotels, and tourism-related services

Future Investments in SAARC Countries by INDIA

India can also make significant investments in the automobile andautomobile components sector in Sri Lanka and Pakistan and hydropowerin Nepal. (hydro-electric power potential of Nepal is about 45,610 MW, buta mere 1.37% of this is currently exploited.)

With India’s considerable advances in software development, itscompanies can be encouraged to invest in information technology (IT)-related industries in Bangladesh, Nepal, and Sri Lanka.

Country and Regional Policy Recommendations

1. Reduction of tariffs and NTBs;

2. Improvement of trade facilitation with the simplification andtransparency of trade regulations and procedures;

3. Curtailment of long negative lists and the removal of important tradingitems in those lists;

4. Improvement and expansion of transportation and telecommunications;energy generation, transmission, and distribution; and otherinfrastructure to support industry and commerce; and

5. Removal of restraints and sector caps on investments among SAARCcountries and simplification of investment regulations.

SAARC Current Affairs

India’s investment in SAARC countries :

Ceat tiers opening manufacturing plant in Sri-Lanka

Colgate-Palmolive Indian Ltd, has made a joint venture in Nepal to capture North India market.

72 Indian companies has made joint venture in Nepal

Shinepukur ceramics a joint venture between Abheesht Exports of New Delhi and Beximo of Bangladesh.

The National Research Development Corporation of India has transferred technologies developed in national laboratories for high draught kiln, spice-oleoresin, anti-fungal tablets, and bleaching powder to Nepal and for buff colour green pepper to Sri Lanka.

Limitation

Low level of Intra-SAARC Trade

Absence of treaties for avoiding double taxation

Indian Income Tax Provisions

Lack of Credibility in Regional Capabilities

Underdeveloped Infrastructure, Skilled Manpower, and Entrepreneurship

India – Pakistan relation.

Conclusion