Saarc members must find a way around roadblocks
The South Asian Association for Regional Cooperation (SAARC) was established in 1985 with the aim of mainstreaming regional cooperation among South Asian countries. Initially seen as a multi-role organization, Saarc’s image has been constantly challenged.
Moreover, the impacts of the Covid-19 pandemic have worsened the plight of Member States. Here we look at the trade-related aspects of Saarland and suggest areas where it could work to expand its role in international trade. South Asia has been among the least integrated regions of the world for years. Current intra-regional trade between South Asian countries is only a third of its capacity.
The estimated gap is about $23 billion per year. While the region had shown growth year after year, the shockwaves of Covid-19 shattered that. With an uneven economic recovery, the region is expected to grow by around 3.4% over the 2020-2023 period, three percentage points lower than four years before the pandemic.
The latest World Bank data (through 2020) represents historically low GDP growth for the South Asian region since 1961, with only Bangladesh (2.4) and Pakistan (0.5) showing positive growth. The geographical proximity of countries in a bloc like Saarland can potentially help them move towards better economic growth and protect themselves from fluctuations in the global economy. However, the World Bank, in a 2019 report, acknowledged the fact that South Asian economies, in general, were more cordial in their dealings with distant economies than with their neighbours.
According to the 2018 report on economic integration in Asia, almost 60% of the trade of the Saarland countries depends on countries outside Asia. This is despite the fact that the South Asian Free Trade Area Agreement (SAFTA) has been in force since 2006; this aimed to achieve full liberalization of trade among Saarcian member states by 2016. The relative failure of SAFTA can mainly be attributed to the paratariffs imposed by countries on each other in addition to the tariffs agreed in the OK. South Asian countries such as India and Pakistan, due to their bilateral disputes, are always on the verge of imposing such additional tariffs on each other.
Saarc and the Association of Southeast Asian Nations (ASEAN) have often been juxtaposed. According to the World Bank, in 2016, South Asia’s intra-regional trade was less than 5%, while East Asia’s trade was more than seven times that of South Asia. South. The report acknowledged that Bangladeshi exports to India could potentially increase by 300%. The main reason for the decline in trade in South Asia has been attributed to the disconnection between member countries, which has been attributed to four reasons: indirect routes to market, insufficient trade agreements between member countries, obstructed border crossings and the scarcity of transport infrastructure.
An ostentatious argument to underline the gap between the achievements of ASEAN and those of the Saarc is the meetings of the member countries. While ASEAN has always ensured regular meetings of member states with heads of countries meeting at least once a year, Saarc members have at one point not met for a continuous period of four years. The latest cancellation of the SAARC foreign ministers’ meeting was due to the contentious issue of Taliban-ruled Afghanistan’s participation.
The ideology behind the creation of ASEAN was to have a conflict prevention mechanism that would lead to better cooperation between countries by containing violent conflicts in the region and also promoting informal communication between them.
On the other hand, the Saarc has not devised any means of resolving disputes between countries and Article X(2) of its charter explicitly prevents intervention in bilateral disputes. While ASEAN turned out to be in a much better position than Saarland, the Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation (“BIMSTEC”) caught the attention of the intelligentsia in order to develop a better comparison with the Saarland.
Established in 1997 by the Bangkok Declaration, BIMSTEC and Saarc have five common members, Bangladesh, India, Bhutan, Nepal and Sri Lanka. Afghanistan restricted most of its international trade after the Taliban takeover. India and Pakistan have long been at loggerheads over trade deals. India’s trade with Nepal and Bhutan has enjoyed a healthy relationship, especially in the energy sector.
For these and other reasons, BIMSTEC may be entitled to prevail over Saarc. However, with the skyrocketing energy needs of developing (and developed) economies, renewables are emerging as the main competitor for energy trading. Given the abundance of renewable natural resources in the South Asian region, Saarc could also consider cross-border energy trade agreements among its members.
India’s trade deals with Nepal and Bhutan, which include hydropower projects, and its consideration of cross-border power trade (“CBET”) with Sri Lanka in 2025 are examples of trade. cross-border energy. Since blocs like ASEAN and BIMSTEC have proven to be better in their approaches than Saarc, Saarc member countries should strive to persuade other members to establish free-trade agreements among themselves. bilateral and trilateral exchanges in order to waive the imposition of para-tariffs on both.
The potential for bilateral agreements has been highlighted by India’s bilateral trade agreements with Sri Lanka and Nepal. Not only have these facilitated trade between economies, but they have also helped break down other barriers as countries focus on broader trade interests. In addition, cross-border renewable energy trade has already been illustrated by India, Nepal and Bhutan. An effort to replicate such bilateral agreements between other Saarc member countries could potentially lead to a paradigm shift in its performance. In addition, Member States must take into account the imperatives of meeting regularly because the ultimate objectives cannot be achieved without cooperation.
(The authors are respectively a lecturer and student at Jindal Global Law School, OP Jindal Global University, Sonipat, India.)