Round up on the 16th SAARC Summit

Is SAARC a half-empty train journey?

The Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL) and the SAARC Chamber of Commerce and Industry (SAARC CCI) in association with Friedrich-Naumann Foundation jointly organised a confab recently to evaluate the progress of implementation of economic decisions taken at the 16th SAARC Summit.

A cross section of members from the SAARC regional chambers, leading academics of the SAARC region and public sector trade policy practitioners attempted to expound the progress of the SAARC regional integration objectively and dispassionately.

The conference was inaugurated by Minister of Industry and Commerce of Sri Lanka Rishard Bathiudeen. Madhukar S.J.B. Rana, former Finance Minister of Nepal, and Annisul Huq, President, SAARC CCI, were among many eminent resource persons who attended the conference. Representatives from all SAARC member countries also participated in the conference.

Deliberations by the resource persons and the ensuing thought-provoking discussion centred on three major themes:

1) Evaluating economic decisions and implementation with a historical perspective of SAARC

2) Making SAFTA a success while dealing with core issues

3) Necessities for implementation strategy

Many deliberations alluded to SAARC as being a “half empty journey” and “travelling in a slow motion train” to describe the slow or lack of implementation process of the SAARC decisions and declarations. It was observed that most of the successive SAARC Summits repeated what had already been discussed and agreed on during the previous summits or repeated economic statements already made by international agencies such as UNCTAD.

In this process, the agendas of SAARC Summit were growing disproportionately in comparison with the actual implementation of the economic decisions. Proposals such as South Asia Food Bank, South Asian Economic Union, Regional Investment Protocol, SAARC Multi-mode Transport System, Poor implementation of SAARC Centres and non-implementation of recommendations by the eminent persons groups were cited as examples for non-implementation of economic and trade decisions.

Although the very essence of SAARC regional integration is to enhance the connectivity among the member states, the telecommunication tariff among the member states in average is far higher than the telecommunication tariff among the non-members. While a plethora of decisions, declarations and recommendations remain to be implemented, new agenda items are regularly coming up in the Summit.

With regard to intra-trade between the member states, it was also observed that no significant development took place since the implementation of SAPTA or SAFTA. At present, intra-trade among the member states of SAFTA is accounted for only 5%, while the other regional trading arrangements such as NAFTA represents 52%, EU 55%, ASEAN 22%, APEC 32% and ASEAN 22%.

The conference found many reasons for the poor performance of trade, investment, economic connectivity in the region and for dismal record of implementation of economic decisions. Trade and economic asymmetries, lack of deep economic and trade complementary, the absence of trade facilitation measures, manufacturing and exporting of similar goods and non-tariff measures were cited for the poor intra-region trade exchanges. Furthermore, the SAFTA agreement does not cover many tradable products of the member states.

In fact, almost all the members maintained large negative lists which are not covered under the agreement. Some of the members are still maintaining the high tariff for most tradable items due to revenue implications.

Major SAFTA trading partners such as India and Pakistan now pay more attention in prioritising regional trading agreements with non-SAARC members. India is now negotiating a Free Trade Agreement with EC. India is also negotiating comprehensive economic partnership agreements with ASEAN, Korea, Japan and Malaysia. Pakistan has already completed a FTA with Malaysia and China. Pakistan is also negotiating FTAs with Bangladesh and the Gulf Cooperation Council (GCE).

Furthermore, while being members of SAFTA, India and Sri Lanka, Pakistan and Sri Lanka concluded bilateral FTAs. These arrangements may have been negotiated due to the slow progress of SAFTA. The multiple of these regional arrangements would dilute the economic and trade importance of SAFTA. It is also pointed out that some of the business travellers have had to postpone their business visits to member countries due to complicated visa processing systems which would normally take at least three to four weeks. Physical as well as ICT connectivity are desired to be improved.

Some of the resource persons drew attention to the lack of common objective and required political mindset among the policy formulators in the region, which is a prerequisite and sine qua non for successful regional integration.

The EC became a successful example for regional integration as a result of the devastating effect of World War II and consequent firm political resolution of the member states to adopt effective measures to avoid the recurrence of such disasters.

ASEAN became a highly integrated region due to the perceived threat from the spread of communism in the region. However, such unifying and compelling forces were not presence in respect of SAARC. In fact, SAARC nations concluded this arrangement with much suspicion and insecurity as some of the members were trying to compete with each other.

The conference identified a number of policy options to address the implementation issues of SAARC economic agenda. In order to address the low intra-trade exchanges under the SAFTA, the meeting proposed the following course of actions:

nNegotiate to reduce the items in the negative list.

nEliminate or reduce hidden trade barriers and entered in to binding commitments for removal of NTBs.

nIdentify trade facilitation measures and implement them with binding commitment.

nCommon sub-sector approach to encourage commitments in trade in services.

nBuild a trade database of services for South Asia.

With regard to institutional reforms, some of the resource persons from the SAARC Chamber Movement proposed to have a representative from the SAARC Chambers of Commerce at the SAARC Secretariat. Business community believes that this measure will facilitate to provide views and inputs of the SAARC business community to the SAARC decision making process.

Some of the members of the business community also suggested allowing a representative from the SAARC Chambers in the SAARC delegations on matters pertaining to economic and trade nature for enhanced interaction with the SAARC decision making process and the business, for all SAARC decisions to be translated into binding decisions to be implemented according to a time-bound framework.

The ceremonial and excessive protocol associated with the SAARC meetings should be reduced to the minimum level and substantive matters should assume high priority in the meetings and discussions at all levels. True political commitment should be displayed by all the member states, particularly the powerful and more resources-enriched members.

The conference sincerely attempted to find possible solutions to make SAARC, particularly its economic agenda, a success to benefit all the member states and for its population to share the economic development and prosperity of the region.

(This article is from the Research and Policy Advocacy Unit of the Federation of Chambers of Commerce and Industry of Sri Lanka. Comments can be emailed to [email protected].)