Saarc Basics

7/31/2019 Saarc Basics

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Rajiv KumarDirector & Chief Executive, ICRIER, New Delhi

Lecture at BIDS, Dhaka, 27 December 2009

SAARC: Retrospect and Prospects


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Promote welfare of people

Accelerate economic growth, social progress and culturaldevelopment

Promote and strengthen collective self reliance among the South

Asian countries Contribute to mutual trust and appreciation of one anothers

problem

Active mutual assistance in economic, social, cultural, technicaland scientific fields

Strengthen cooperation with other developing countries

Strengthen cooperation among themselves in international forums

Cooperate with international and regional organizations withsimilar objectives

Promote and enhance mutual trade (since 1991)


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Agriculture and

RuralDevelopment.

Health andPopulationActivities

Women, Youthand Children

Environment andForestry

Science and

Technology andMeteorology;

HumanResourcesDevelopment

Transport Economic

Tradefacilitation

Funding

mechanism Legal

People to Peoplecontacts

Tourism

Energy Biotechnology


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SAARC Secretariat: Located in Kathmandu, Nepal The Secretariat comprises the Secretary General,

seven Directors and the General Services Staff

Seven Technical Committees under the RegionalIntegrated Programme of Action (RIPA): Agriculture and Rural Development Health and Population Activities

Women, Youth and Children Environment and Forestry Science and Technology, and Meteorology Human Resources Development Transport.


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Committee on Economic Cooperation (CEC) comprising Commerce/TradeSecretaries of Member States established in 1991.

SAARC Chamber of Commerce and Industry (SCCI), bringing together theNational Chambers of Commerce and Industry of Member States,established in 1992.

Eleven Regional Centres run by a Director from the host country and stafffrom the member states:Agricultural Information Centre (Dhaka); Meteorological Research Centre (Dhaka);Human Resource Centre (Islamabad); Coastal Zone Management Centre(Maldives); Information Centre (Nepal); Energy Centre (Pakistan); Tuberculosis and

HIV/AIDS Centre (Kathmandu); Documentation Centre (New Delhi); DisasterManagement Centre (India); Cultural Centre (India); Forestry Centre (Bhutan)

Five Working Groups created in January 2004, to take forwardcollaboration in new and emerging areas :Telecommunication and Information and Communication Technology (ICT);Biotechnology; Intellectual Property Rights (including Traditional Knowledge);Tourism; Energy.


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SAARC STORM: Joint programme conducted by India,Bangladesh, Nepal and Bhutan to monitor severe thunderstormin the region (2009).

Telemedicine Project: Inaugurated in Bhutan in April (2009).

SAARC Energy Trade Study (SRETS): Completed with theassistance of the Asian Development Bank (ADB) (2009).(Special Meeting of the Working Group to examine the trade optionsidentified by the SRETS and prepare an action plan)

SAFAS: Agreement on trade in services likely to be finalisedsoon.

SARSO :Agreement on establishment of South Asian RegionalStandards Organisation signed: 4 countries have already

ratified it (2008).


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SAARC Development Fund (SDF): Agreement to establishat the 15th Summit (2008).(SDF now operational and India is the only SAARC member to havecontributed its full commitment of US$189.9 million)

SAARC Regional Multimodal Transport Study (SRMTS) byADB (2007): Identified nine pilot, sub regional and regional project

Included road, rail and air links Projects to link Afghanistan, Pakistan, India and Nepal

were identified in second ministerial meeting


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Regional Food Bank: Ratification by members (lessAfghanistan) to set up with total reserve of 2.43 ml.tonnes of food stock (2007).(Food bank did not prevent the steep rise in food prices in 2008)

South Asian University :Agreement for setting up theSouth Asian University was signed during the 14thSAARC Summit (2007)

(A project office established in New Delhi, India,2009)

SAFTA: Signed in 2004, became operational in 2006.

(Intra region trade still very low)


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Outcomes not commensurate with official statements:

Projects have been identified under Technical Committeesand Working Groups, but the implementation is slow.

Poor resources and technical capacities to monitor andevaluate the activities of the Regional Centres.

The projects of the Regional Centres not demand driven

The SAARC Multimodal Transport Study completed in 2007 isvery promising, but the pace of progress is slow.

Tangible gains though small are confined to trade.


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Intra-regional trade as a proportion of the worldtrade has remained low, 4.7% in 2008

Informal trade accounts for 72 % ($1.5 bn) of

formal trade in the regionShare of Intra-Regional Trade in Total SAARC Trade

1991-2008

0

1

2

3

4

5

6

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Years

Percent


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Barriers to formal trade:

Weak port and transportinfrastructure

Restrictive rules of origin

Persistence of high levels ofoverall protection


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South Asia Bangladesh India Maldives Nepal Pakistan Sri Lanka

Overall Ease of DoingBusiness (Rank) 119 133 87 123 85 105

Trading AcrossBorders (Rank) 107 94 126 161 78 65

Number of Documentsfor Export 8.5 6 8 8 9 9 8

Days taken to Export 32.4 25 17 21 41 22 21

Cost to Export (US$ per

container) 1,364.10 970 945 1,348 1,764 611 715Number of Documentsfor Import 9 8 9 9 10 8 6

Days taken to Import 32.2 29 20 20 35 18 20

Cost to Import (US$ percontainer) 1,509.10 1,375 960 1,348 1,825 680 745

Source: Doing Business Report, 2009, World Bank

Difficult business environment


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Country Non-LDC LDC

Afghanistan 1072

Bangladesh 1254 1249

Bhutan 156

India 865 480

Maldives 671

Nepal 1310 1296

Pakistan 1191

Sri Lanka 1065

Large Sensitive lists

Sensitive lists of SAARC Countries


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Bangladesh Nepal Sri Lanka

Bangladesh 1.3 0.7

India 48.2 97.6 89.7

Nepal

Pakistan 27 0.8 3.6

Sri Lanka 24.8 0.2

Intra- Regional FDI (2007)

Low level of IntraSAARC investment flows

Source: ADB (2009)


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From perceiving SAARC as being against its interest to arecognition of its assymetric role

Since the formation of SAARC, neighbouring countries have

feared Indias hegemony in the region

India now recognises that it should undertake asymmetricalresponsibility to assuage fears of member countries

Unilaterally reduced negative list of items from 744 to 480 forSAARC LDCs.

A task force has been set up by the Ministry of Commerce toaddress NTBs faced by partner countries.


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Agreement for setting up the South Asian University wassigned during the 14th SAARC Summit (3-4 April 2007).India has enacted the SAU act (2009) and established aproject office in New Delhi.

Has agreed to fund the Telemedicine project (inauguratedin Bhutan, 2009) and also act as the hub.

Plan to set up 50 automated weather stations in Nepal,Bhutan, India and Bangladesh (2009).

India voluntary allocated $100 million to the SAARCDevelopment Fund in addition to the assessed

contribution (2008).


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Since 2007, India-Bangladesh investment

restrictions removed.

India-Pakistan investment decisions nowmade on a case by case basis.

Residual fears of Indias hegemonic

intentions need to be addressed.


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Confidence building measures to be undertaken: Trade expanding measures in place and in the pipeline to be

pursued with greater vigour. Strengthening of the SAARC secretariat by bringing in more

professional expertise and increasing the number of people. SAARC process to be made more broad based by includingprofessionals, business community and civil society.

Successful completion of agreed initiatives: Starting the transport corridors identified in the SMRTC Study by

ADB. Early completion of the on going work on identifying and

eliminating non-tariff measures.

Measurable indicators to evaluate the goals should be

initiated.


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The realization that a relative over emphasis

on border measures discourage regional co-

operation. Regional cooperation needed to address

issues like poverty, mal-governance and

inequitable growth.

Create a better understanding of neighbouringcultures and societies.


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India-Bangladesh co-operation can set a newparadigm for SAARC integration.

Recent Initiatives: India has agreed to offer transit facilities to Bangladesh to access Nepal &

Bhutan.

Both sides agreed to movement of containerised cargo by rail and water forbilateral trade

Bangladesh agreed to provide access to Ashuganj Port as a new port of callas well as the use of Chittagong port by India

Both sides have agreed to enhance cooperation in the power sector andIndia has agreed to provide at least 100 MW to Bangladesh on a prioritybasis.

The renewal period of the Protocol on Inland Water Transport and Trade,which governs the bilateral movement of goods through inland waterways,

has been extended from one month to two years


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Joint approach to Multilateral Development

Banks for regional cooperation required.

Re-explore sub-cooperation among the fourEastern member countries

Encourage cross-border cooperation betweenneigboring countries.


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Pure Economic & non-traditionalgains

Strategic Gains

Developmental and

Environmental efficiency gains

Non-economic gains


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Greater regional output and resource utilization.

Significant expansion of intra-industry trade andcommerce.

Geographical specialization across the region

esp. in agricultural sector.

Greater investment flows due to the creation oflarger market.


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Large country-small country dynamics.

Large countries build new geopolitical alliances.

Small countries learn to effectively deal with larger

trading blocs in multilateral negotiations.

A unified market for hydrocarbon imports

from Central and West Asia.

Negotiating advantage in multilateral

forums.


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Potential gains through alliance withCentral Asian countries

Afghanistans membership

Energy trade

Confidence-building measure

Lock-in mechanism


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Integrated approach towards provision of regionalpublic goods like-

Environment

Water conservation Infrastructure

Natural resources including regional ecosystems andrelated bio-diversity.

Tackle the negative externalities-

Drug and human trafficking

Floods, pandemics

Ecological degradation


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Politically stable and tension-

free region would result in

Greater FDI, remittances

Low defense budgets