Chandigarh, Nov. 9
ON the eve of the SAARC summit in Bangladesh, the Prime Minister, Dr Manmohan Singh, on Wednesday said regional economic integration could generate billions of dollars of new income, employment and trade. Consequently, the creation of a South Asian Free Trade Area (SAFTA) for economic integration and to promote the region as a trade block was necessary, he said.
Delivering the P.N. Haksar Memorial address here, Dr Singh said, "Regional economic integration is more about finding an engine of growth rather than just promoting trade. Countries developed as well as developing have looked to regional economic integration as a means of strengthening their economic competitiveness and as an engine of economic growth in the recent years."
Regional economic co-operation and integration will also make member countries, especially the smaller ones, more attractive destinations for third-country investments by obviating the constraints imposed by a small domestic market.
"Studies have shown that the opportunity cost of non-cooperation for South Asian countries has been substantial. Regional economic integration in South Asia could generate billions of dollars of new income, employment, trade and could help the region fight against poverty," the Prime Minister added.
Citing the examples of the European Union, the North American Free Trade Agreement (NAFTA) that pushed ahead with plans for a larger Free Trade Area of Americas, and the ASEAN Free Trade Agreement (FTA), the Prime Minister said such regional arrangements were not just for trade promotion but for exploiting the potential of efficiency-seeking restructuring of industry on a pan-regional basis.
By removing trade policy barriers, SAFTA would lead to an estimated trebling of intra-regional trade.
This would make South Asian internal trade more respectable compared to the existing marginal 4-5 per cent share by making it possible to trade directly rather than through third countries. It would also lead to cost savings for the region, he said.
"However, we must see SAFTA as a forerunner of deeper economic integration in the region" he added. SAPTA or bilateral FTAs with Sri Lanka and Nepal have already had a beneficial impact.
He said that a common SAARC transport policy to facilitate movement of goods should be evolved.
Steps should be taken to improve connectivity by roads, railways, inland waterways, shipping and airlines.
To promote regional cooperation in the area of energy, a South Asian Energy Dialogue comprising experts, academics, environmentalists, bureaucrats and NGOs could examine the potential for energy cooperation, he said.
Cabinet reshuffle: Official sources today indicated that a Cabinet reshuffle was likely some time next week after the Prime Minister returns from the SAARC meet.
"There are some vacant ministries that need to be filled," they said.
Also, for the time being, the External Affairs Ministry will remain with the Prime Minister's Office.