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SAARC special article when SAFTA moves then SAARC runs

Half of the Participating Heads of Government Arrived for 18th SAARC Summit
Half of the Participating Heads of Government Arrived for 18th SAARC Summit

(Dipendra Adhikari)

‘Let perseverance be your engine and hope your fuel.’ – H Jackson Brown, Jr.- an American author.

The above mentioned saying applies to the SAARC mechanism with the proper examination of its SAFTA engine to gear it up.

The South Asian Association for Regional Cooperation (SAARC) is the inter-governmental organization comprising eight countries in Southern Asia. It was established on 8th December 1985 when its Charter was officially approved by the Heads of State or Governments of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.

Afghanistan joined the regional group from the 14th Summit in April 2007 after a long wait.

Though the organization was established with the objectives of enhancing economic prosperity and strengthening multilateral relations for the welfare of the people in the region, it is still struggling to achieve these objectives.

The preliminary proposal of the organization was raised by Nepal expecting to enjoy the easy access to the sea under this umbrella organization. Later on, Bangladeshi President Ziaur Rahman proposed the draft of the organization as a trade bloc.

Nepal and Bangladesh as the least developed countries (LDC) initiated to form such regional umbrella bloc for the trade protection while they were and still are fighting against trade deficit.

During its three decade tenure, SAARC has formed different bodies and signed on several agreements. Among them South Asian Free Trade Agreement (SAFTA) was the most expected and awaited bodies for accelerating the economic prosperity in the regions.

Then it was initiated in 2004 by the SAARC to ensure the regular increase of intra-regional trade activities.

However, the intraregional trade among the SAARC countries remains very stationary in comparison to their extra-regional trade activities. It has hardly conducted 6 percent of the total trade volume of the regional members, whereas European Union has around 70 percent and the ASEAN has 28 percent.

Due to the various political and economic reasons it was delayed to be formed when some member countries including the biggest countries in the organization, India was unwilling for it since long. This is because of India had several trade agreements with Nepal, Bhutan, Maldives and Sri Lanka.

Such kinds of trade agreements India with Pakistan and Bangladesh were hindered due to political and economic anxieties. In such scenario of the SAARC, its member countries signed an agreement aiming to progressively lower tariffs and taxes among the member countries, in Dhaka in 1993. After a decade long wait, during the 12th SAARC Summit in Islamabad, member countries formulated the South Asia Free Trade Agreement (SAFTA).

It was a great achievement to the majority of least developed countries which created a framework for the establishment of a free trade area covering 1.5 billion people in the areas.

And this agreement came in to operation on January 1, 2006. With the development of new economic Policy in the world, a trade bloc is taken as intergovernmental agreement as a part of regional intergovernmental organization where existing regional barriers to trade are reduced enjoying free trade policy.

North American Free Trade agreement (NAFTA) is a high sounding and most effective economic blocs in the world where more than fifty per cent of world commerce has been conducting under the bloc umbrella. Such bloc should strengthen ties among the member countries sharing free trade area for the production having common product policy and its regulations.

It further expects free movement of capital, labour, enterprise and services with strong review on the sides.

Economist Jeffery J. Scott argues that for a trade bloc to be successful, members must share four common traits: similar levels of per capita national income, geographic proximity, similar or compatible trading regimes, and apolitical commitment to regional organization. For better or for worse, trade blocs are prevalent.

However, the SAARC comprises one-fifth of the world population fifty per cent poor live in the region facing hindrances of poverty.

For the above mentioned perspectives, SAFTA objectives say:
1. To promote the socio-economic welfare and cultural development of the people in the region.
2. To achieve the goal of collective self-reliance.
3. To encourage active collaboration in the economic social, technical and scientific fields among the grouping nations.
4. To strengthen over-all co-operation and harmonious economic and political relations among the countries of the SAARC.
5. To facilitate optimum utilisation of human and material resources.
6. To develop free regional trade.
7. To stimulate investment flows and accelerate pace of economic development.

But, SAARC countries have not achieved success for extending trade and economic relations in the region. These countries should have competed for trade with other countries. Having adequate natural and other resources in the region, they are yet to be materialized for the welfare of the people.

India and Bangladesh are just in competitive race for their share in the world markets for jute goods. Similarly, India, Sri Lanka and Pakistan are in competition for readymade garments. Likewise, India and Sri Lanka and Nepal compete for tea market. But the region has been always lacking policy for unified marketing which is the motto of any trade bloc.

It needs collaborative policy under the multi-lateral foreign economic diplomacy to develop the bloc as a common and competitive in this modern scenario of globalization. The organization is bewildered in its goal due to political influence of each nation though that should be ignored for the common welfare of the people.

It has lacked a common mechanism of reviewing a tariff and non-tariff trade policy in the liberalized trade policy to compete in liberalized global market. It needs to revitalize the trade policy by developing maximum consensus among the member countries with high trust, strengthen co-operation and co-work in common issues to accelerate economic growth in the region.

Nevertheless, Nepal is yet to be benefited from the SAFTA increasing export rate developing industries in the foreign market. Over two third national markets cover by foreign policy and products.

But the country is blatantly enjoying remittance by selling the sweat and blood of the thousands of youths toiling in the Gulf countries. The government is busy in signing labour agreement with Gulf countries rather than exporting national products.

In the days ahead, the SAARC should be developed as a strong and a vibrant economic bloc having sound effect in international arena rather than a mere discussion forum.

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