SAARC and South Asian Economic Integration

Author(s): Muchkund Dubey

Source: Economic and Political Weekly , Apr. 7-13, 2007, Vol. 42, No. 14 (Apr. 7-13,
2007), pp. 1238-1240
Published by: Economic and Political Weekly

Stable URL: https://www.jstor.org/stable/4419435

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 Commentary

SAARC and South Asian

does not cover potentially the largest
segment of trade in the region, i e, that
between India and Pakistan.

Economic Integration
It is the measures of deeper integration
which make regional integration worth-
while. These measures help in operation-
alising and giving meaning and substance
Economic integration in south Asia has remained a to free trade agreements. For example, it
non-starter even after 22 years of the South Asian Association is through investment flows that the
dynamic advantages of an FTA can be
for Regional Cooperation. The misplaced and exaggerated security
realised. Moreover, deeper integration can
concerns of India and Pakistan are a huge hurdle. The emphasis in
be pursued even if the process of free trade
these countries needs to shift from state security to human security.is interrupted due to unforeseen circum-
stances. Finally, if south Asia is to move
MUCHKUND DUBEY launched. For almost a decade, SAPTA towards an economic union or community,
meandered along the unproductive course it will not be possible without cooperation
outh Asia constitutes an ideal group-of commodity-by-commodity negotia- in all major economic domains.
ing for economic integration. It is a tions for reducing tariffs. Then came the Cooperation in the field of transport and
huge contiguous land mass criss- South Asian Free Trade Agreement transit should top the list of measures of
crossed by mighty rivers, with a wealth of(SAFTA) at the end of the Islamabad deeper integration. In fact, it is the essential
natural resources, a variety of climatic SAARC Summit in January 2004. precondition for reaping the advantages of
conditions, and a common history and a free trade regime. The advantages of
heritage, as also shared languages, literatures competitiveness gained by the reduction
Flawed by Political Choice of tariff and non-tariff barriers can be
and religions. The Indian subcontinent
which constitutes the bulk of the region, SAFTA is a deeply flawed agreement realised only if products can move physi-
has also inherited from the colonial period and that too, by a political choice. The goal cally to the other countries. This is not
common institutional and legal infrastruc- of free trade, i e, reducing tariffs to the possible without transport and transit
tures and a common physical infrastruc- range of 0 to 5 per cent, is going to be facilities. The non-availability of these
ture of roads, railways and inland water- realised over a very long period of time, facilities constitutes a physical barrier to
ways. These got disrupted and discon- ie, 2013-16. By thattime, the wholeprocess trade more formidable than the worst of
nected at places, because of prolonged may become irrelevant because of the likely tariff and non-tariff barriers.
neglect, disuse and even deliberate de- reduction of tariffs to this and even lower In the last 22 years that SAARC has been
struction during periods of conflict. They levels, as a result of multilateral trade in existence, member countries have not
can be restored without much cost. South negotiations under WTO and under agreed to accord transit facilities through
Asia has a market consisting of 1.3 billionbilateral free trade agreements. There is their territories for goods coming from
consumers with rising incomes. And lastly,no commitment to eliminate non-tariff neighbouring countries. Nor have they
over the last two decades, there has agreed to any scheme of cooperation to
barriers. The negative lists agreed are too
been a convergence of the macroeconomiclarge. For example, India's negative list restore
is the common transport infrastruc-
policies of these countries and also di-larger than that in some of its bilateral free
ture. Bangladesh continues to deny transit
facilities through its territory for the
versification of their economies alongtrade agreements, and almost four times
similar lines. movement of Indian goods to other parts
as large as its latest offer in the negotia-
of India. For a country like Afghanistan,
In spite of this, south Asia is a latecomer tions for a free trade agreement with the
in the arena of regional integration. The Association of Southeast Asian Nations. which has become a new member of
first wave of regionalism triggered, aboveThere is no specific provision in the SAARC, cooperation under the associa-
all, by the signing of the Treaty of RomeAgreement for the adoption of measures tion has little meaning if it is not granted
in 1957, totally bypassed the region.of deeper integration, such as grantingtransit of facilities by Pakistan for Afghan
goods to reach the markets of India and
Institutionalised regional cooperation be- transit facilities, cooperation for develop-
gan as late as in 1985 when the South ment of transport and other forms of Bangladesh.
in-
Asian Association for Regional Coopera-frastructure, liberalisation of investment Cooperation under SAARC has not
tion (SAARC) was established. SAARC, and trade in services, cooperation in'the suffered on account of dearth of ideas,
schemes, or vision. A variety of proposals,
by a political choice, shunned cooperationfinancial and monetary fields, and coor-
in the hard core economic areas of money, dination, if not harmonisation, of macro-
schemes or ideas that can deepen coopera-
tion and enhance welfare have been ad-
finance, trade and manufactures, until 1995,economic policies. And the worst of all,
vanced either by experts and think-tanks
when after the completion of the first round Pakistan has refused to apply the SAFTA
of negotiations, the South Asian Preferen-provisions to its trade with India. An FTA
or by the member governments themselves.
tial Trading Arrangement (SAPTA) wasin south Asia has very little meaning ifSome
it of these have been brought on the

1238 Economic and Political Weekly April 7, 2007

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agenda of SAARC, and based on discus- likely to be taken at the 14th SAARC relevant regional trading arrangements fo
sions and negotiations in this forum, con- summit, to establish a South Asian Uni- the adoption of special measures in favo
crete schemes. legal instruments, declara- versity. This is supposed to be an Indian of the lesser developed member countri
tions and decisions have been adopted. initiative. India is, therefore, spearheading On the other hand, the adoption of su
The following are some examples: the process and would like to take the credit measures has been one of the princip
- The SAARC food security reserve; for it. One would wish this proposed uni- factors accounting for the success of re
- Agendaof action for poverty eradication; versity to become a reality and develop into gional integration among developed cou
- Programme for disaster management; a centre of excellence in the region. How- tries, particularly the European Union
- Conventions on suppression of terrorism, ever, going by the experience of the past, Under the EU, a fund was created to ass
drug trafficking and trafficking in women this institution is also likely to languish for the newly admitted lesser develope
and children; want of support from the member states. members like Spain, Portugal and Irelan
- Declaration on the girl child; and Why has regional integration in south to come closer to the level of developme
- The SAPTA and SAFTA. Asia remained a non-starter? There are of the more developed member states. T
But all of these were agreed upon as reasons for it. Firstly, because size
several of of resources allocated under this fund
though with the intention not to letpolitical
them differences, the member coun- was quite substantial, amounting to 3
work. They were announced withtries great 5 per cent of the gross national produ
have simply refused to play even the
fanfare and made newspaper headlinespositive-sum games, lest such moves ben- of the lesser developed country concern
but subsequently they were deliberately
efit the other party. There is a tendency This
to facility has been extended to the e
make things deliberately difficult for
allowed to languish or run a long tortuous European countries which have recent
neighbours in order to strike an undefined
course along which no progress was possible. been admitted to the EU. For exampl
SAARC was presented with a vision in
and undefinable Poland has been allotted a sum of $ 27
future bargain. One of the
the report submitted to the summit member
in 1998 countries, Pakistan, wants to use billion over the next three years f
by an eminent persons' group (EPG). its The
non-participation in any positive-sum modernising and diversifying its econom
report projected the vision of south with India as a leverage for solving the For the least developed SAARC coun
Asia
game
marching towards an economic union Kashmir
by problem. It has consciously de- tries, the mere extension of duty free acc
2020 via the route of SAFTA to be accom- cided to maintain a distance from India as into the markets of the more develop
plished by 2010, and a south Asian cus-a means of resolving this issue in its favour. member countries is not enough. This
toms union by 2015. The EPG also elabo-This is in spite of the fact that the pursuit because of a supply constraint, the form
rately laid out the roadmap for realising theof this self-defeating policy for the last 60 cannot take full advantage of free trad
vision. But the heads of state/governmentyears, has not yielded any positive results. The EPG had recommended the creation
ofSAARC countries did not share this vision of a large size fund for the purpose of
either in the form of a separate document Misplaced Security Concerns enhancing the export production capacity
or as a part of the declarations adopted by of the least developed member countries
them since 1998. There was, therefore, no The second reason is that the member of the region. SAFTA makes no such
question of their adopting a roadmap orcountries, particularly India and Pakistan,
provision nor has there been any mention
a time frame for reaching the goal. of this idea in any of the declarations
have allowed progress in their bilateral
If we look at the course of SAARC over relations and in SAARC to be held hostage
adopted by the heads of government/state
of the SAARC countries.
the last 22 years, it seems that the member to theirmisplaced and exaggerated security
states never intended to achieve market 'concers. They have thus allowed their There is a very strong case, both on
integration or deploy the mechanismzobsession
of with state security to prevail over economic and political grounds, for India
human security. That is why these coun-
regional cooperation for bringing prosper- to extend unilateral duty-free and quota-
tries are not allowing people, ideas and
ity to the region and enhancing the welfare free access to its market for products from
news to move freely across their borders.
of their people. Most of the decisions made the least developed countries of the region.
and schemes launched were in the nature of Another reason for the failure of the This really involves extending such treat-
a public relations exercise to outsmart each SAARC countries to move towards ment to only Bangladesh, as there are
other with a view to impressing the outside regional integration is the refusalalready
of theunilateral free trade arrangements
world and hoodwinking the people of in place with Nepal and Bhutan. Such a
larger countries of the region, particularly
the region. The SAARC process has thus India, to discharge the responsibility
movethat
by India, in addition to contributing
been an exercise in competitive deception. devolves upon them for ensuring theexpansion of Bangladesh's exports,
to the
The SAARC member states have opted is also going to redound to India's benefit.
success of the regional integration arrange-
for organising events like SAARC car ment. Experience shows that regionalFor, in a free trade situation, a sizeable part
rallies, SAARC sports meet, SAARC of the increase in Bangladesh's export
integration, particularly among develop-
archaeological congress, etc, that catch ing countries, can succeed only earnings
if the is bound to be spent on larger
newspaper headlines but which have only economically stronger member states imports
adoptfrom India. Besides, this will also
one-time ephemeral significance. They measures for enabling the weaker be member
in keeping with the moral obligation that
morethe
have established institutions, particularly states to derive equitable benefits from advanced among developing coun-
regional centres, for which a lot of credit integration process. The first wave tries, of
like India and Brazil, have assumed
was taken when they were launched, but regionalism among developing countries under one of the early harvests of the Doha
which languished for want of financial collapsed mainly because of the non-
round at the Hong Kong ministerial meet-
support. Now the latest in this series of compliance by the economically strongering of WTO. In Hong Kong, "developed
one-time wonder is going to be the decision member states with the provisions in themembers and developing country
country

Economic and Political Weekly April 7, 2007 1239

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members declaring themselves to be in a earlier for the exercise of policy options state. Even among those who received
position to do so" will "provide duty-free and for making macroeconomic policy land, on an average 13 per cent had lost
and quota-free market access...for all decisions. This has serious implications for it by 2001, and the number of landless rural
products originating from all LDCs...". ensuring peace, justice and sustainability households increased from 39.6 per cent
There is now a growing opinion that the of development in their own countries and in 1987-88 to 49.8 per cent in 2000 (ac-
process of economic integration in south for their ability to cooperate with each cording to the West Bengal government's
Asia will remain mired unless there is a other. Therefore, a major task in the south first Human Development Report). The
Asian states, as elsewhere in the third Human Development Report of the Plan-
change in the character of the states in those
countries. What is needed is a shift from world, is to recover the space surrendered ning Commission brought to light far more
the emphasis on the security of the state tounder the pressure of globalisation. ll devastating facts - in rural West Bengal
human security in these countries. More-[This article was written before the 14th SAARC 85 per cent of the population did not have
over, under the impact of globalisation andsummit in New Delhi.] pucca houses; women and children were
liberalisation the states in south Asia have more underfed and anaemic than in other
lost much of the space available to them Email: csdnd@del2.vsnl.net.in states; 35.66 per cent of its population still
remained below the poverty line - all these
figures reducing the state to the 20th

Moral Betrayal of a position in the list of 32 states and union

territories in terms of the human develop-
ment index. The government's tall claim

Leftist Dream of improving the lot of dalits and tribal

people was also punctured soon when the
Pratichi Trust, headed by no less a person
than Amartya Sen, came out in 2002 with
A sense of public anger in West Bengal over Singur and Nandigram shocking revelations about the discrimi-
has not added up yet to a statewide agitation against the Left Front.nation against students of scheduled castes
The electorate is wise enough to recognise that there is no viable and tribes in the primary schools of the
alternative as yet. But if the CPI(M) continues to be obdurate, state. As for the other Left proclamation of
enhancing the status of the Muslim minor-
public outrage may take desperateforms. Reactionaryforces like
ity (which constitutes almost a quarter of
the Trinamool and BJP are waiting in the wings - the first such the population of the state), the Sachar
ominous signs were evident in Singur and Nandigram. Committee found that its share in statejobs
was only 4.2 per cent. We must add to this
SUMANTA BANERJEE concern - the decline in moral standards the dismal record of the government's
in Left politics over the last two to three
failure to prevent closure of factory after
nce a political movement becomes decades which has eaten into the marrows factory, leading to unemployment and
an-object of public hatred and of the Left movement and dragged it intosuicide among industrial workers.
derision, it presages the erosion of the present quagmire. One can, of course, endlessly go on
its base and forecasts the eclipse of its When in 1977 the West Bengal elector- arguing over the causes - whether it was
credibility. Sad to say, the Left movement ate voted the Left Front to power with a the centre's "step-motherly" treatment in
in West Bengal is hanging under such a thumping majority, they did not bargainallocating financial resources, whether it
threat. We should not in the least under-
for a communist revolution, but expected was the Left leadership's failure to plan a
mine the serious challenge faced by thea clean and efficient administration that long-term strategy of follow-up measures
Left Front government there which standswould carry out long awaited land reformsto bring about sustainable development, or
on the threshold of a new direction of and meet the basic needs of the urban whether it was the built-in structural hurdle
growth and faces choices of models to populace.
be Endowed with a legacy of in the capitalist system within which the
adopted. But whatever choice it makes has
struggle against exploitation and an image
Left had to operate. But curiously enough,
to be embedded in probity and integrity. despite all these failures, the overwhelm-
of sacrifice and honesty, the communists
And it is in this respect that the Left has ing presence of the Left is all-pervasive
of West Bengal were supposed to set their
failed us. Nandigram is an example of one in West Bengal, as evident from its ability
government as a role model for other states.
Today, after 30 years of continuous rule, to
more betrayal on the top of the already high theemerge victorious with the same thump-
pile of disappointments. Left leaders of the state face the probleming majority in every consecutive election
The debate over the popular agitation over the last three decades.
of re-establishing their credibility not only
and the state response in Nandigram hasamong their own constituency, but also in
till now been confined mainly to three the entire country. The initial euphoria over
Expanding Base,
issues: (i) the conflict between the eco-
the success of land reforms, the panchayati
Shrinking Ideological Roots
nomic priorities of agricultural production
system and adult literacy programmes, soon
gave way to scepticism when skeletonsParadoxical as it might sound, it is this
and industrial growth; (ii) the way the state
started tumbling out of the cupboard.victory at the polls - "the never ending
should handle it; and (iii) its human rights
dimension. Notwithstanding the impor- audacity of elected persons", as once
At the turn of the 21st century, it was
tance of debating these questions, itrevealed
is that onlyl5 per cent of the described
net by Walt Whitman - that pulled
urgent to foreground the more basic arable land had been distributed in the the Left down to the depths of abominable

1240 Economic and Political Weekly April 7, 2007

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