The Hindu Business Line : Strong on SAFTA

THOUGH THE RAPPROCHEMENT between India and Pakistan all but eclipsed the 12th summit of the seven-nation South Asian Association for Regional Cooperation in Islamabad, it may be crucial as it could smoothen the functioning of the association, which has obvious potential to improve the economic status of the members. It is to be hoped that the Islamabad summit will mark a turning point for the grouping, which is strong in the formulation of programmes for multi-faceted cooperation but critically weak in implementation.

The adoption in this changed SAARC political milieu of the framework agreement on the South Asian Free Trade Area gives this economic measure more significance than it would have in the absence of any progress in India-Pakistan relations. In fact, the prospects of an effective implementation of SAFTA — which aims to reduce import duties on most goods traded within the region to 5 per cent or lower— are now brighter because New Delhi and Islamabad are at long last in a mood to trade goods rather than the invective or missiles they have over the past decade. Pakistan could have given the SAARC economic agenda a further thrust had it extended the most-favoured-nation status to India. This would not only have righted an economic anomaly (Pakistan has to extend this status to India as it is a member of the WTO), but also removed any doubt that might still linger (in the sub-continent and outside) about Islamabad turning over a new leaf vis-à-vis cooperation with New Delhi.

It has been argued that with the signing of SAFTA, extension of MFN status to India is now somewhat redundant. But if this were so, Islamabad should readily have gone ahead as it would, while not changing materially the economic position, have enabled Pakistan score some political points. That this has not happened throws poor light on the prospects of SAFTA itself, the run-up to the framework accord showing up the the differences within SAARC, especially between the developing members (India, Pakistan and Sri Lanka) and the least-developed economies (Bangladesh, Nepal, Bhutan and the Maldives). With two deadlines already missed, the overriding fear is that sorting out the operational problems among the members may run into serious difficulties, disrupting the current schedule of implementation.

In this background, it is clear that the Islamabad Declaration's commitment to a South Asian Economic Union will remain on paper for some more time in the absence of a "suitable political and economic environment (which) would be conducive to the realisation of this objective;" lessfff said about India's vision of a common SAARC currency the better. The "historic" social charter — to establish a people-centred framework for social development and to respond to the immediate needs of the most distressed — may meet with more success because it is sufficiently generalised in its objective (poverty alleviation, population stabilisation, women's empowerment, etc.) and vague in apportioning responsibilities among the members.

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