Why Integration of SAARC is important?

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South Asia is one of the most populous regions in the world boasting a population of 1.749 Billion. Most of the countries in the region are in various stages of economic development and aspire for regional economic integration.

Today, even the well-informed political observers have to admit that hardly anyone would cite SAARC, the South Asian Association for Regional Cooperation, as a role model for regional cooperation when examining different forms of political or economic regional integration.

Such a discussion would first of all focus on the European Union, and ASEAN in South East Asia. SAARC seems to be overshadowed by these organizations and although this regional association is of many years’ standing, having existed for more than thirty years, can it be deemed to be successful? In the eyes of the world, it has enjoyed comparatively few real successes since it was founded in 1985. The Charter signed by the founders of SAARC (Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka) promises much and bears many similarities to the founding charters of the other regional associations mentioned above. But even regional observers have criticized SAARC for having good intentions but achieving fewer practical results.

Source: Reuters/Narendra Shrestha
Source: Reuters/Narendra Shrestha

India, the largest country in the region, has been predicted to become an important global economic player in the world by 2030. Pakistan, the second largest South Asian country does not enjoy a robust economy but has the potential to act as a bridge between the countries in the Gulf, China, India and Central Asia for regional economic integration.

The other modest countries like Bangladesh, Bhutan, and Sri Lanka, are today in a much more politically stable condition then they were a few years back, and therefore could both benefit and support a South Asian regional economic integration. Afghanistan could also benefit from such integration in the post-US withdrawal phase of its nation building efforts.

Since decades the issues of India-Pakistan has dominated the unproductive (or productive by SAARC’s standards) sessions. If Pakistan joins other SAARC countries to sign the Motor Vehicles Agreement and fully implements the Afghanistan-Pakistan Transit and Trade Agreement (APTTA), the subcontinent could see a revolution on the roads.

The possibility of trucks moving from Kabul to Kolkata and Chittagong, while Pakistan could if it chooses to offer access for Afghan trucks all the way to the Indian check posts at the Wagah-Attari border. Imagine dozens of trucks with food supply and medical aids for Nepal earthquake goes to Nepal from Kabul, Islamabad, Delhi, Thimphu and Dhaka by roads. While this may sound fantastic but the reality is that the only roadblocks to such a vision are political and can easily be adopted on the ground. It could fairly open up opportunities for India to Central Asia, and even as other countries in SAARC follow suit. Unfortunately, Pakistan has decided not to support the agreement during the SAARC summit held in Kathmandu in November 2014, on the ground that it needs more time to consult all its provinces.

On June 2015, Bangladesh, Bhutan, India and Nepal (BBIN) signed the landmark Motor Vehicles Agreement for the Regulation of Passenger, Personnel, and Cargo Vehicular Traffic among the four South Asian neighbors in Thimphu, Bhutan. This major initiative between sub-grouping of four SAARC nations is expected to pave the way for a seamless mobility of people and goods across each other borders for the benefit and integration of the region, thereby pushing economic development in South Asia at large.

India only has bilateral motor vehicle agreements with Nepal and Bangladesh but a multilateral agreement would go a long way in boosting trade in the region. The agreement opens up the possibility of turning border roads into economic corridors which could increase inter-regional trade within South Asia by 60%.

India has tapped on its eastern neighbours and the framework of the new agreement was finalised in a meeting of the transport secretaries of the four countries at the South Asia Sub-regional Economic Cooperation (SASEC) — another grouping of south Asian countries which includes India, Bangladesh, Bhutan, Maldives, Nepal and Sri Lanka — held in Kolkata in February 2015. Pakistan is not part of this grouping. SASEC was set up in 2001 to bring together these six countries to promote regional prosperity and boost trade by improving cross-border connectivity. If Pakistan persists in its obstructionist agenda, New Delhi is signaling it would find itself marginalized in the larger South Asian dynamic.

India is pursuing a similar framework between India-Myanmar-Thailand (IMT), the Motor Vehicle Agreement (MVA) is almost ready and will be signed soon in order to get access to the larger ASEAN market through seamless passenger and cargo movement. The agreement was to be signed last year but it was delayed due to elections in Myanmar.

Image: South Asia’s total trade within the sub-region and with the world:

South Asia’s total trade within the subregion and with the world.
Source: Asia Regional Integration Center (ARIC) Integration Indicators Database. 

Asia has become the world’s most vibrant region because of its sustained economic growth over the last many decades. Maintaining this remarkable growth rate, however, requires market integration to ensure the free flow of goods, services, and capital across borders. Surely, the interplay of market forces and increased participation in the trade have been decisive in the growth of rising Asian economies. Until now, most of Asia’s final goods have been exported to Europe and the United States. Access to large markets allowed Asian countries to utilize their economies of scale on the one hand and encourage growth in their productive sectors on the other. With the rise of Asia, it is time for these countries to cooperate and become an integrated market of their own.

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