The Hindu Business Line : Saarc realities

Nearly four years ago, the then Bangladesh Foreign Minister, Mr M. Morshed Khan, on a visit to New Delhi, had pleaded for a time-bound taskforce that would have as its objective the expansion of intra-Saarc trade, without which the entire regional exercise would be doomed to failure. The situation today is hardly any better than it was in 2004, despite the India-Sri Lanka free trade agreement and the recent initiatives to facilitate freer bilateral trade between India and Bangladesh, not to speak of the unilateral step taken by New Delhi to reduce tariff barriers vis-À-vis least-developed-country (LDC) members.

Clearly, if Saarc is to fulfil its objective of becoming an effective vehicle for multi-faceted regional growth, intra-regional trade needs to be encouraged much more, the assumption being that closer cooperation in other spheres will naturally follow. As of now, intra-regional trade forms a paltry four per cent of the total trade of Saarc member-countries, which not only compares dismally with around 25 per cent of intra-Asean trade but is also way behind the Saarc target of 15 per cent by 2010. It is therefore welcome that the Union Minister of State for Commerce, Mr Jairam Ramesh, should have recently come out with a strong plea to strengthen Saarc’s regional trade bonds, his argument being that if the grouping is to make its mark on the global stage, the route must lie through the region itself. He also emphasised the fact that, being the biggest constituent of the association, India will have to take the lead in tackling the major obstacles hindering the development of regional trade. Mr Ramesh has pinpointed the freeing of intra-regional investment opportunities (between India and Pakistan, for instance), which will help reduce the deficits suffered by such partners as Bangladesh and Pakistan in their trade with India.

The terrain, however, is strewn with obstacles that only regional cooperation can remove. India alone cannot make much headway in devising solutions unless there is all-round reciprocity. Thus, the shortening of the trade negative-list for LDC member-countries by New Delhi will bear full fruit for Saarc as a whole only if, say, Pakistan extends most-favoured nation treatment to India, a step that has not been forthcoming despite being mandated by the association’s rules. Similarly, the removal of non-tariff barriers — where India is expected to take the lead — is dependent on many extra-economic inputs, which makes progress difficult, especially with elections round the corner. The strengthening of existing land Customs stations and the setting up of new ones are other measures that hold promise for stepping up intra-regional trade, but only if adequate funds for installing appropriate infrastructure are available and implementation is on time — both scarce elements, if the past is any indication.

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