Fruits of a union

Fruits of a union

Nov 24, 2014-

Almost 29 nine years have elapsed since the emergence of Saarc on December 8, 1985. The organisation’s adolescence suffered frequently from oscillating and volatile circumstances, encapsulated by asymmetrical economic growth, growing political wrangling, and protracted political transitions, coupled with increasing cross-border terrorism, prolonged civil conflicts, persistent refugee problems, and ruthless military coups within and among the member states. Unlike the European Union, the Association of South East Asian Nations, and the North American Free Trade Agreement, Saarc lacks homogeneity in both the economic and social structures of member countries. In such a context, its unremitting struggle for development in the region by mobilising cooperation is, indeed, a challenging proposition.

Dimension of activities

However, Saarc is now a full-blown reality, with a specific vision, mission, and objective to jointly serve the common pursuit of its 1.6 billion population, which is 23.4 percent of the world population, by ensuring high, sustainable, and inclusive economic growth along with social justice and a reasonably low level of inflation. The region, comprising of Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka, possesses great potential for biodiversity, human resources, and trade and investment. These factors can spark robust growth, with increasing employment opportunities and the speedy reduction of poverty by effectively promoting economic integration and mobilising regional cooperation in priority sectors. Saarc has introduced several initiatives on a wide spectrum of cooperation in various areas, such as agriculture and rural development, biotechnology, culture, economy and trade, education, energy, environment, finance, information, communication and media, people-to-people contact, poverty alleviation, science and technology, and security aspects. All of these have the potential to be instrumental in strengthening the region’s economic, social, and cultural development.

The 18th Saarc Summit, thus, is a great opportunity to strengthen economic integration and mobilise cooperation, ensuring long-lasting peace and prosperity in the region. To recall, Saarc adopted a series of economic and other agendas in the past, including the identification of new areas for cooperation. This long list includes a diversified pattern of regional cooperation, including the South Asian Free Trade Agreement (Safta), South Asian Customs Union (SACU), South Asian Economic Union (SAEU), Saarc currency, Saarc Regional Multimodal Transport Study, Asian Highway (AH), especially South Asia Segment, South Asian University (SAU), Saarc Development Fund (SADF), Saarc Development Bank (SDB), Saarc Food Security Reserve, and sub-regional cooperation in energy, transport, trade and investment, ICT, and tourism. Declarations on these issues have already been ratified in earlier summits held during the last three decades. However, some proposals received lukewarm responses, attributed to the inability of Saarc to effectively implement them, given the lack of trust and understanding among member states.

Many constraints

Despite the strong presence and active support of Saarc Observers with powerful economies, such as Australia, China, the EU, Iran, Japan, South Korea, and the US and the establishment of 11 Regional Centres on agriculture, meteorology, tuberculosis, documentation, human resource development, coastal zone management, information, disaster management, fishery, and culture, the prospects for regional cooperation in South Asia have been lacklustre, confined merely to a ceremonial blowing of trumpets.

Of many significant facets of economic cooperation to successfully implement in the Saarc region, it is imperative to gradually liberalise trade, promote investment, simplify customs procedures, remove non-tariff and para-tariff embargoes, drastically reduce the Safta sensitive list, develop energy, and expand cross-border trade with adequate fiscal stimuli. Common predicaments and intractable built-in limitations the Saarc region has been facing for a long time include inadequate supply of energy, followed by relatively poor infrastructure, especially the inferior segment of the Asian Highway in South Asia. The existence of non-tariff barriers, licencing requirements, and rules of origin and protection have been detrimental to resilient growth in the region.

Given how power-starved the region is, it is essential that the Saarc Inter-Governmental Framework Agreement for Energy Cooperation (Electricity) be ratified, ensuring energy security at a greater quantum in the region. The obligatory and unwarranted restrictions to regional electricity trade must be purged to provide opportunities for power exports and diversify investment in electricity generation. Specific projects on energy and power, transport and trade, ICT and tourism should kick-off under the jurisdiction and mechanism of sub-regional cooperation.

As identified in the Saarc Regional Multimodal Transport Study (SRMTS), connectivity should be enhanced with the removal of physical barricades. The construction and maintenance of the South Asian segment of the Asian Highway network should be accomplished within the given time-frame.

Towards an economic union

It is necessary to achieve the long-run target of a South Asian Economic Union through the comprehensive execution of agreements on trade in goods, services, and investments resulting in the configuration of a South Asian Customs Union (SACU) by 2020, which would lay the foundation for the proposed economic union. The facilitation of the cross-border flow of trade in services and finance are crucial factors to deeper economic integration. In addition, there is need to wind-up the Saarc Investment Promotion and Protection Agreement with the early signing of a Regional Railways Agreement to speedily enhance connectivity in the region. The proposed Saarc Development Bank (SDB) must function with a view to especially offer financial buttress to the requirements of a funding gap, particularly for the development of infrastructure.

South Asia suffers critically from climate change and environmental degradation. Food security too is a primary concern for the South Asian region. Efforts should be directed towards addressing these problems. Member countries must devise a collective strategy for improving the use of remittances in productive sectors of the regional economy. Finally, it would be highly pragmatic that South Asia be declared a ‘No war zone’ during the upcoming Saarc Summit as a part of the Kathmandu Declaration to ensure optimal economic progress, peace, and stability in the region.

Dahal is Chairman of Mega Bank Nepal

Published: 25-11-2014 09:19

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