Tensions Between South Asian States Threaten SAARC

South Asian states established the actual South Asian Association with regard to Regional Cooperation (SAARC) in 1985 to enhance a peaceful co-existence. SAARC consists of eight member countries, namely Bangladesh, Indian, Pakistan, Maldives, Sri Lanka, Nepal, Afghanistan and Bhutan. According to it’s charter, the main purpose of SAARC would be to enhance collective self-reliance and to create mutual trust and understanding.

Turbulent histories between member states have meant that it has not already been easy to achieve the SAARC’s goals. One major reason for the failing of SAARC is the persistence associated with political conflicts and conflicts among the member states which appear unresolvable in the near future. Over the years, there’s been minimal promotion of co-operation in the political, social and economic sectors. Little achievement has occurred in increasing mutual trust between members. There’s still insecurity among SAARC members, especially regarding India’s rapidly emerging dominant role in South Asia.

Divergent economic pursuits have particularly hindered SAARC’s ability to harness its complete potential through economic partnerships. Effective economic policies form an important aspect of any regional bloc. Yet SAARC only took the first step in this direction in 1998 with the launch of the Southern Asian Preferential Trade Agreement (SAPTA). Within the agreement members decided to liberalise with the ultimate objective of achieving a free trade area. Additionally, SAARC’s more economically civilized world agreed to assist the less civilized world in the region.

Like various other regional trade agreements, the expectation had been for SAPTA to generate greater regional output and more effective source utilisation. However, the volume of intra-regional trade increased only marginally. The list of concessions offered below SAPTA included 3857 tariff lines however the major limitation was the particular trade coverage of preferential trade granted.  The concessions given by the countries were not substantial enough to increase the overall trade of the region.

SAPTA failed to take into account the diverse needs of each member state. Member countries should have recognized the existing production capabilities from the region and matched all of them with each member nation’s demand pattern to determine the magnitude associated with future trade potential. Ultimately, to ensure effective resource mobilisation, countries must also resolve regional conflicts and aid each other to achieve self-sufficiency.

In 2006, there was another make an effort to strengthen the economic integration associated with SAARC members with the implementation from the South Asian Free Industry Agreement (SAFTA). This agreement extended the scope of SAPTA to incorporate additional trade facilitation mechanisms and switched the tariff liberalisation procedure from a positive to a unfavorable list approach in the hope the SAARC countries would do away with the actual import tariffs on just about all goods except the ones set aside under the ‘sensitive lists’. This will help a freer economic integration among the countries. A special consideration in SAFTA was the promise of compensation for small countries struggling revenue losses in the event of contract price reductions.

However, the success of SAFTA is also doubtful. Political issues between member countries have constantly superseded SAARC’s economic interests.The SAARC is not able to significantly further financial integration. Nor has this been able to enhance trade considerably.

The agreement faces certain problems such as a difficult business environment, overcoming port restrictions and increasing product coverage. Port-specific restrictions have increased the transactions costs of trading across borders and have sometimes led to a virtual blockage of imports between the SAARC countries. SAFTA also allows member countries in order to retain sensitive lists of commodities and services that are out of the concessional ambit. This negative checklist is often accountable for the lower volume of intra-regional trade between member countries and limits the scope with regard to achieving a free trade routine.

The existence of restrictive rules concerning trade origin and destination of products reflect a protectionist attitude among members. High tariffs and stringent rules of origin, for example, often result in inadequate administrative capacity as well as procedural delays disrupting the easy flow of goods. As a result, members of SAARC indulge in illegal trading actions assumed easier than legal trade in the region.

South Asian countries right now follow a trend of bilateral trade agreements instead of multilateral agreement, because the benefits of SAFTA are insignificant for his or her growing economies.Trade diversion is therefore a common phenomenon in the South Asian Region. Hostility between India and Pakistan offers encouraged Pakistan to seek economic support from other developed nations for example China and the United States. At present, Pakistan is subject to preferential tariffs from China and the United States on the large number of products, undermining its factor to the regional process. Bangladesh and Sri Lanka are also becoming more and more dependent on their international trade with non-SAARC members.

SAARC is actually slowly but surely becoming a redundant organisation. Strong economic ties through SAFTA would improve SAARC and provide it with the resilience to play the pivotal role in the global context. However, two major efforts towards economic integration have failed and caused frustration across the region. To achieve their aims, member states must resolve their political conflicts through discussion and threshold. Instead of taking short-term decisions, nations need to develop functional mechanisms for strategic decision-making able to help a vision for the future.

SAARC countries reveal a degree of common social, cultural and historic roots. They can restore friendly relations and progress together, if they’re willing to do so.

SAARC still damaged by divisions is republished along with permission from East Asian countries Forum