SAARC puts trade pacts on fast track
Addu, November 11
Afghan President Hamid Karzai wore his characteristic karakul tilted at a rakish angle. The newly anointed Nepal Prime Minister Baburao Bhattarai came with his Nepali topi and seemed overwhelmed by the occasion. Manmohan Singh wore his favourite blue turban. Bangladesh Prime Minister Sheikh Hasina was dressed in an intricately woven sari with the pallu covering her head.
Sri Lankan President Mahinda Rajapaksa preferred a white vesti with a maroon scarf slung across his kurta for the closing ceremony and a brightly designed floral shirt for the retreat. Bhutan Prime Minister Jigme Thinley wore a colourful gho - the traditional Bhutanese ceremonial wear.
Only Pakistan Prime Minister Yousuf Reza Gilani, who had to leave before the ceremony ended, and Maldivian President Mohamed Nasheed stuck to business suits that the region’s erstwhile colonial master favoured.
The presence of the leaders at the retreat in the picturesque Shangrila resort and later at the closing ceremony at the spanking new Hithadhoo Convention Centre symbolised both the diversity and the unity of the region that reinforced the notion that SAARC had finally arrived. The image of it being a grouping of poor nations with begging bowls in hand is fast being replaced with that of an alluring cluster of energetic, young nations that were raring to take their place under the sun. As Nasheed put it at the opening ceremony, “For too long, South Asia was considered a sideshow in the theatre of global politics. But today, we occupy centre stage. The eyes of the world are upon us. This is our time to shine.”
In its 26th year, SAARC is finally taking the shape of a cohesive grouping of nations willing to cooperate in key areas to boost their economic clout. The Addu Declaration that the leaders agreed upon focused on the theme of “Building Bridges.” The leaders committed to work towards a huge boost in intra-SAARC trade, improving air, rail, motor and water transport connectivity between member countries and putting their heads together to solve common developmental concerns. (see box for highlights) Four agreements were also signed that included a rapid response mechanism to deal with natural disasters, an agreement to establish a SAARC Seed Bank and two agreements on harmonising regional standards for goods and products.
Yet, while the leaders may have reason to feel Uufa (happy in dihevi, Maldives official language) over the summit outcome, it was apparent that SAARC still had a long way to go. Many of the leaders complained that while there were plenty of big ideas to move ahead, implementation of these had been slow. As Pakistan’s Gilani said, “The gap between the promises made at SAARC and the reality needs to be bridged.”
Sri Lanka’s Rajapaksa echoed similar sentiments when he said at the plenary, “What is evident around us is a mood of urgency and even impatience. This is especially so because a large and influential part of our societies consists of young people inspired by new ideas and looking for ward with enthusiasm to a promising future for themselves. They cannot be kept waiting for long. Their patience is not infinite.”
Bhutan’s Thinley put it more bluntly, “There has been a failure to resolve geopolitical realities and we have allowed ourselves to be guided by the politics of the past. Good intentions have been foiled, or remain only in documents. Progress has stalled, depriving South Asia of the opportunity to flourish as a peaceful region with people free of poverty.”
Sensing the mood, India, the main driver of the grouping, decided to accelerate the pace by being magnanimous. At the summit, Manmohan Singh announced that in a major effort to liberalise trade in the region, India had issued a notification to reduce the sensitive list under the South Asian Free Trade Area Agreement (SAFTA) from 480 tariff lines to just 25 for the five Least Developed Countries (LDC) of the region - Nepal, Bhutan, Afghanistan, Bangladesh and Maldives. He said that zero basic customs duty access will be given to all items removed with immediate effect.
Ever the economist, Manmohan Singh reminded the leaders that the summit is taking place when the global economy is under acute stress and recessionary trends being faced by most developed countries. He warned that developing countries would be squeezed for capital, investments and markets for their exports.
As a remedy, the Indian prime minister wanted normalisation of trade relations in SAARC to be done on an urgent basis including expediting the finalisation of the SAARC Agreement on investment flow. As Manmohan Singh said, “Admittedly, there is a lot to be done but the political will is there. We have all come to believe that regional cooperation in South Asia is good for each one of our countries.”
It was apparent that SAARC had reached a crucial tipping point in its 26-year-old existence. For most of its developing years, SAARC had become a forum for India bashing by its smaller neighbours. But with India’s spectacular economic growth in the past decade, the member countries now realise that its own boat could be lifted by the rising tide caused in the wake of its giant neighbours success.
The SAARC region straddles the Indus plains, the Gangetic delta, the high Himalayan mountains and the low lying islands of the Indian Ocean. Each of the countries have comparative advantages that if synergised could benefit all immensely. Bhutan and Nepal are endowed with hydropower. Afghanistan and Pakistan have the possibilities of earnings from transit as does Bangladesh. Maldives can tap its rich marine resources.
The main reason why SAARC has met with only moderate success is that it has tried to do many things that has resulted in somewhat diffusing its focus. Experts feel that it should focus on key areas such as trade liberalisation and making SAFTA a reality, improving connectivity through transport by having air, rail and motor vehicles agreements and taking steps to enhance agricultural productivity and ensuring food security. The Addu declaration rightly emphasises these priorities and needs to be urgently implemented.
Intensify efforts to fully and effectively implement the South Asian Free Trade Areas (SAFTA) agreement and work on reduction in Sensitive Lists as well as early resolution of non-tariff barriers and expediting the process of harmonizing standards and customs procedures. n
Direct SAARC Finance Ministers to chart a proposal that would allow for greater flow of financial capital and intra-regional long-term investment. n
Conclude the Regional Railways Agreement and convene the Expert Group Meeting on the Motor Vehicles Agreement before the next Session. n
Ensure completion of the preparatory work on the Indian Ocean Cargo and Passenger Ferry Service, including the Feasibility Study, by the end of 2011. n
Direct the conclusion of the Inter-governmental Framework Agreement for Energy Cooperation and the Study on the Regional Power Exchange Concept as also the work related to SAARC Market for Electricity.
n Direct SAARC Finance Ministers to chart a proposal that would allow for greater flow of financial capital and intra-regional long-term investment.
n Conclude the Regional Railways Agreement and convene the Expert Group Meeting on the Motor Vehicles Agreement before the next Session.
n Ensure completion of the preparatory work on the Indian Ocean Cargo and Passenger Ferry Service, including the Feasibility Study, by the end of 2011.
n Direct the conclusion of the Inter-governmental Framework Agreement for Energy Cooperation and the Study on the Regional Power Exchange Concept as also the work related to SAARC Market for Electricity.