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SAARC: South Asian Association forRegional Cooperation
Making Regional Trade AgreementsWork in South Asia
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Contents
Introduction and Background Information
Objectives
How far has SAARC Progressed?
Trade and economic cooperation
Why SAARC is a disappointment?
How to Make SAARC Work
Conclusions
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Introduction and BackgroundInformation
The South Asian Association for RegionalCooperation (SAARC) was established inDecember 8, 1985
Members
Evolution
Meetings
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An economic and political organization of eightcountries - Bangladesh, Bhutan, Maldives, Nepal,
Pakistan, India and Sri Lanka, Afghanistan
Members Observers
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Objectives
SAARCs mission is to accelerate the process ofeconomic and social development of memberstates
To contribute to mutual trust, understanding andappreciation of one anothers problems.
To promote active collaboration and mutualassistance in the economic, social, cultural,technical and scientific fields
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To strengthen cooperation with other developing
Countries.
To strengthen cooperation among themselves in
International forums on matters of commoninterests
To cooperate with international and regionalOrganizations with similar aims and purposes
Objectives
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How Far Has SAARC Progressed?
Summits have taken place focusing onexpanding and strengthening the regionalcooperation
Several ministerial level meetings have taken
place to give due emphasis in various fields
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Creation of food bank holding reserves 241,000
tons of rice and wheat for security reasons
Antiterrorism police force set up in Pakistan
South Asian Free Trade Agreement (SAFTA)
How Far Has SAARC Progressed?
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Trade and Economic Co-operation
In 1991, a Regional Study on Trade,Manufactures and Services (TMS) was
completed.
The Council of Ministers at its Ninth Session inJuly 1991 decided to set up a high-levelCommittee on Economic Cooperation (CEC)
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The Council of Ministers at its FifteenthSession agreed that the full and timelyrealization of the benefits of regional economiccooperation required
a) the implementation of trade control barrierswithin the specific timeframes and
(b) eventual progression to the creation of a free-trade area in the region.
Trade and Economic Co-operation
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The following initiatives have also been taken
towards promoting trade cooperation within the
region:
i) Cooperation in the field of Handicrafts andCottage Industries
ii) Study on Transport Infrastructure and TransitFacilities
Trade and Economic Co-operation
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Why SAARC Has Been aDisappointment
SAARC is ineffective due to conflicts between itsmembers and a lack of progress madecompared to other regional organizations suchas ASEAN
Pakistans political instability
Nuclear arms race and Kashmir conflict betweenIndia and Pakistan
Main challenge facing SAARC today how tomake it effective and action oriented
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Why SAARC Has Been aDisappointment
Social indicators
- Poverty, education, natural disasters, Indiasworkforce size
Political factors
- India and Pakistan, systemic differences andmilitary conflict
Economic factors
- Ineffective trade, GDP imbalance, tradeimbalance
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Social Indicators: Education
Low education level in some countries is leading to alack of development
Gaps between enrolment and completion of education
Literacy rate, adult total (% of population)
0.00
20.00
40.00
60.00
80.00
100.00
India
Pakis
tan
Nepal
Mald
ives
Bhutan
B
angla
desh
SriL
anka
A
fgha
nista
n
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Social Indicators: Indias
Workforce
Labour force of India is much larger thanother SAARC members, therefore tradeagreements would be in favour of India
Labour force, total
050,000,000
100,000,000150,000,000200,000,000
250,000,000300,000,000350,000,000400,000,000450,000,000500,000,000
India
Pakis
tan
Nepal
Maldi
ves
Bhutan
Ban
glade
sh
SriL
anka
Afgh
anist
an
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Political Factors: India and Pakistan
India and Pakistans relationship is tense
- differences in foreign policies and differentpolitical systems
- Indias foreign policyis focused on
self-reliance
- Pakistans foreignpolicy is outward
oriented
- Kashmir conflict
- nuclear arms race
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Political Factors: SystemicDifferences and Military Conflict
Pakistans political instability
- Benazir Bhutto and Musharraf
Different political systems
- Democracy, military dictatorship, Buddhistmonarchy, transitional democracy
Political tensions due to harbouring terrorists
Indias disputes with other SAARC members
Nepal and Maoist rebels
Tamil Tigers in Sri Lanka
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Economic Issues: GDP Imbalance
India is by far the largest economy in SAARC,which skews the regional relationships in itsfavour
Despite this, SAARCs total GDP comprises lessthan 1/20th of theworlds GDP
GDP (thousands US$)
0
100000000
200000000
300000000
400000000
500000000
600000000
700000000
800000000
900000000
1000000000
2001 2002 2003 2004 2005 2006
India
Pakistan
Nepal
Maldives
Bhutan
Bangladesh
Sri Lanka
Afghanistan
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Economic Issues: Ineffective Trade
Trade between Pakistan and India is currentlyrouted through Dubai
SAFTA will allow formal trading relationship
between Pakistan and India without third partyinvolvement
Landlocked regions lack of resources and lack
of access to markets Member states producing substitute goods,
reducing impetus to trade amongst each other
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How to Make SAARC Work
Use SAARC as a social tool to solve regionaldisputes before tackling economic problems
Establish political stability first, then developcommon economic policies and regionalstandards
Find ways to offset Indias large size and itsinfluence on SAARC
More action, less talk
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How to Make SAARC Work
If SAARC cooperates, FDI will be increased,reducing poverty and hardship.
Improve infrastructure and increaseexpenditures on infrastructure,especially inremote areas like Nepal and Bhutan
Natural disaster aid efforts can provideopportunities for regional cooperation
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Country # Products Depth ofconcessions
Bangladesh 572 10% -15%
Bhutan 266 10-20%
India 2402 10-100%
Maldives 390 5-15%
Nepal 425 10-15%Pakistan 685 10-30%
Sri Lanka 211` 10-75%
TOTAL 4951
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