World Trade Organizations Principal of Management

Assignment 01 Group A:

Farrukh Dilawar Muhammad Ramis Muhammad Shahzaib Syed Hamza Ali Sharik Abdul Majeed

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What is Trade Organization?? Trade organization is a system in which goods, capital, and labor flow freely between nations, without barriers which could hinder the trade process. Many nations have free trade agreements, and several international organizations promote free trade between their members. There are a number of arguments both for and against this practice, from a range of economists, politicians, industries, and social scientists.

A number of barriers to trade are struck down in a trade agreement. Taxes, tariffs, and import quotas are all eliminated, as are subsidies, tax breaks, and other forms of support to domestic producers. Restrictions on the flow of currency are also lifted, as are regulations which could be considered a barrier to free trade. Put simply, free trade enables foreign companies to trade just as efficiently, easily, and effectively as domestic producers.

The idea behind the concept is that it will lower prices for goods and services by promoting competition. Domestic producers will no longer be able to rely on government subsidies and other forms of assistance, including quotas which essentially force citizens to buy from domestic producers, while foreign companies can make inroads on new markets when barriers to trade are lifted. In addition to reducing prices, free trade is also supposed to encourage innovation, since competition between companies sparks a need to come up with innovative products and solutions to capture market share.

In this Article we will discussed five Free Trade Organizations under mentioned:

Bilateral Agreement:

Pakistan-China Free Trade Agreement

Multilateral Agreement Organization:

European Union

North American Free Trade Agreement.

Asian Pacific Free Trade Agreement.

South Asian Association for Regional Co-operation.

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China–Pakistan Free Trade Agreement The China–Pakistan Free Trade

Agreement is a major free

trade agreement signed

between the People's Republic

of China and Pakistan. It was

concluded in 2006 and entered

into effect in July 2007.

Trade volume due to

agreement between the two

states was $13 billion in 2013,

while is expected to reach $15

billion by 2015. China had been contributing significantly to Pakistan’s imports even before

the FTA was signed and has seen considerable improvement in its ranking after the FTA was

implemented in 2007. By 2012, it was the source for 15% of Pakistan’s overall imports from

the world as compared to 9.8% in 2006.

China Pakistan Relation:

China–Pakistan relations began in 1950 when Pakistan was among the first countries to end

official diplomatic relations with the Republic of China on Taiwan and recognize the PRC.

Since then, both countries have placed considerable importance on the maintenance of an

extremely close and supportive relationship and the two countries have regularly exchanged

high-level visits resulting in a variety of agreements. The PRC has provided economic,

military and technical assistance to Pakistan and each considers the other a close strategic

ally. The relationship has recently been the subject of renewed attention due to the

publication of a new book, The China-Pakistan Axis: Asia's New Geopolitics, which is the first

extensive treatment of the relationship since the 1970s.

Bilateral relations have evolved from an initial Chinese policy of neutrality to a partnership

with a smaller but militarily powerful Pakistan. Diplomatic relations were established in

1950, military assistance began in 1966, a strategic alliance was formed in 1972 and

economic co-operation began in 1979. China has become Pakistan’s largest supplier of arms

and its third-largest trading partner. Recently, both nations have decided to cooperate in

improving Pakistan's civil nuclear power sector.

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Economic Trade Agreements:

Economic trade between Pakistan and China is increasing at a rapid pace and a free trade

agreement has recently been signed. Military and technological transactions continue to

dominate the economic relationship between the two nations, although in recent years

China has pledged to vastly increase their investment in Pakistan's economy and

infrastructure. Among other things, China has been helping to develop Pakistan's

infrastructure through the building of power plants, roads and communication nodes.

Current trade between both countries is at $9 billion, making China the second largest trade

partner of Pakistan.

Both countries are keen on strengthening the economic ties between the two, and have

promised to 'propel' cross-border trade. This has led to investment in Pakistan's nascent

financial and energy sectors, amidst a surge of Chinese investment designed to strengthen

ties. Pakistan has in turn been granted free trade zones in China.

The economic relationship between Pakistan and China is composed primarily of Chinese

investment in Pakistani interests. China's increasing economic clout has enabled a wide

variety of projects to be sponsored in Pakistan through Chinese credit. Pakistani investment

in China is also encouraged and cross-border trade remains fluid.

In 2011 China Kingho Group canceled a $19 billion mining deal because of security concerns.

On 26 April, China Mobile announced $ 1 billion of investment in Pakistan in

telecommunication infrastructure and training of its officials within a period of three

years. The announcement came a day after China Mobile subsidy Zong emerged as the

highest bidder in the 3G auction, claiming a 10 MHz 3G band license, qualifying for the 4G

license.

On 22 April 2015, According to China Daily, China released its first overseas investment

project under the One Belt, One Road for developing a hydropower station near Jhelum.

TIMELINE OF PAK-CHINA FREE TRADE AGREEMENT:

Important events:

1950 – Pakistan becomes the third non-communist country, and first Muslim one, to recognize the People's Republic of China.

1951 – Beijing and Karachi establish diplomatic relations.

1963 – Pakistan cedes the Trans-Karakoram Tract to China, ending border disputes.

1970 – Pakistan helps the U.S. arrange the 1972 Nixon visit to China.

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1978 – The Karakoram Highway linking the mountainous Northern Pakistan with Western China officially opens.

1980s – China and the U.S. provide support through Pakistan to the Afghan guerillas fighting Soviet forces.

1986 – China and Pakistan reach a comprehensive nuclear co-operation agreement.

1996 – Chinese President Jiang Zemin pays a state visit to Pakistan.

1999 – A 300-megawatt nuclear power plant, built with Chinese help in Punjab province, is completed.

2001 – A joint-ventured Chinese-Pakistani tank, the MBT-2000 (Al-Khalid) MBT is completed.

2002 – The building of the Gwadar deep sea port begins, with China as the primary investor.

2003 – Pakistan and China signed a $110 million contract for the construction of a housing project on Multan Road in Lahore.

2007 – The Sino-Pakistani joint-ventured multirole fighter aircraft – the JF-17 Thunder (FC-1 Fierce Dragon) is formally rolled out.

2008 – Pakistan welcomes the Chinese Olympic Torch in an Islamabad sports stadium, under heavy guard amidst security concerns.

2008 – China and Pakistan sign a free trade agreement.

2008 – Pakistan and China to build a railway through the Karakoram Highway, in order to link China's rail network to Gwadar Port.

2008 – The F-22P frigate comes into service with the Pakistani Navy.

2009 – The ISI arrest several suspected Uyghur terrorists seeking refuge in Pakistan.

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2010 – Pakistan and China conduct a joint anti-terrorism drill.

2010 – China donates $260 million in dollars to flood hit Pakistan and sends 4 military rescue helicopters to assist in rescue operations.

2010 – Wen Jiabao visits Pakistan. More than 30 billion dollars worth of deals were signed.

2011 – Pakistan is expected to buy air-to-air SD 10 missiles from China for its 250 JF 17 thunder fighter fleet

2013 – Management of Gwadar port is handed over to state-run Chinese Overseas Port Holdings after previously being managed by Singapore’s PSA International and it becomes a matter of great concern for India

.

2013 – Chinese Premier Li Keqiang visits Pakistan. Trade between China and Pakistan hit a 12-month figure of $12 billion for the first time in 2012.

2013 – On 5 July 2013, Pakistan and China approved the Pak-China Economic corridor which will link Pakistan’s Gwadar Port on the Arabian Sea and Kashghar in Xinjiangin northwest China. The $18 billion project will also include the construction of a 200km-long tunnel.

2013 – On 24 December 2013, China announced a commitment $6.5 billion to finance the construction of a major nuclear power project in Karachi, the project which will have two reactors with a capacity of 1,100 megawatts each.

2014 – Chinese Premier announced investment of $31.5 billion in Pakistan mainly in countries energy, infrastructure and port expansion for Gwadar. According to The Express Tribune initially projects worth $15–20 billion will be started which include

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Lahore-Karachi motorway, Gwadar Port expansion and energy sector projects will be launched in Gadani and six coal projects near Thar coalfield. The newspaper further claimed that the government has also handed over to Pakistan Army the task of providing fool-proof security to Chinese officials in Baluchistan, Pakistan in a bid to address Beijing’s concerns and execute the investment plan in the province, which will get 38% of the funds.

2014 – On 22 May 2014, The governments of Pakistan and China on Thursday signed an agreement to start a metro train project in Lahore, Express News reported. The 27.1 kilometers long track – named Orange Line – will be built at the cost of $1.27 billion.

2014 – On 8 November 2014, Pakistan and China signed 19 agreements particularly relating to China–Pakistan Economic Corridor, China pledged a total investment worth of $42 billion. While Pakistan pledged to help China in its fight concerning the Xinjiang conflict.

2015 – On 20 April 2015, Chinese President Xi Jinping, accompanied by the First Lady and a delegation of high-level officials and businessmen, visits Pakistan. It is the first visit to Pakistan by a Chinese president after a gap of 9 years and the first foreign trip of Xi in 2015. 51 Memorandums of Understanding are signed, including the plan of "Pakistan China Economic Corridor".

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European Union:

The European Union, or EU, is a unified monetary

body that tries to balance the needs of its 28 member

countries, all of whom are independent fiscal and

political entities. It has all the advantages of a large,

unified trading area but the disadvantages of political

conflict between its members. It tries to overcome

this disadvantage through a series.

How the EU Was Founded

The concept of an European trade area was first established in 1951, with the European Coal

and Steel Community, which had six founding members: Belgium, France, Germany, Italy,

Luxembourg and the Netherlands. In 1957, the Treaty of Rome established a common

market, which meant customs duties were eliminated (in 1968) and common policies,

particularly in trade and agriculture, were put in place. It expanded to nine members in

1973 (Denmark, Ireland and the UK), and created its first Parliament in 1979. Greece joined

in 1981, followed by Spain and Portugal in 1986.

In 1993, the Treaty of Maastricht established the European Union common market. Two

years later, the EU expanded to 15 members (Austrian, Sweden and Finland), and then to 25

in 2004 (Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,

Romania and Slovakia and Slovenia). Currently there are 28 countries working under the

platform of European Union.

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Member States:

Its 28 members are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark,

Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,

Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain,

Sweden and the United Kingdom.

How Does It Work?

All border controls between members were eliminated, allowing the free flow of goods and

people (except for random spot checks for crime and drugs). Public contracts are open to

bidders from any member country. Any product legally manufactured in one member state

can be sold in any other member, without tariffs or duties. Taxes have been standardized.

Practitioners of most services (law, medicine, tourism, banking, insurance, etc.) can operate

in all member countries. The cost of airfares, the internet and phone calls have fallen

dramatically. It's known formally as the European Economic and Monetary Union.

How Is It Governed?

The EU is run by three bodies: the EU Council, representing national governments, the

Parliament (elected by the people) and the European Commission (the EU staff). They make

sure members act consistently in regional, agricultural and social policies. The EU also

transmits state-of-the-art technologies to its members in environmental protection,

research and development, and energy.

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The EU is funded by contributions of €120 billion a year from member states.

Here's how the three bodies uphold the laws governing the EU, which are spelled out in a series of treaties and supporting regulations:

1. The EU Council sets the policies and proposes new laws. The political leadership, or Presidency of the EU, is held by a different leader every six months.

2. The European Parliament debates and approves the laws proposed by the Council. Its members are elected every five years.

3. The European Commission staffs and executes the laws. Jean-Claude Junker is the President until 2019.

EU institutions and other bodies: There are the European Institution and EU agencies are distinct bodies from the EU institutions – separate legal entities set up to perform specific tasks under EU law. There are over 40 agencies, divided into 5 groups

European Parliament

European Council

Council of the European Union

European Commission

Court of Justice of the European Union (CJEU)

European Central Bank (ECB)

European Court of Auditors (ECA)

European External Action Service (EEAS)

European Economic and Social Committee (EESC)

Committee of the Regions (CoR)

European Investment Bank (EIB)

European Ombudsman

European Data Protection Supervisor (EDPS)

Interinstitutional bodies

In the EU's unique institutional set-up:

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The EU's broad priorities are set by the European Council, which brings together national and EU-level leaders.

Directly elected MEPs represent European citizens in the European Parliament.

The interests of the EU as a whole are promoted by the European Commission, whose members are appointed by national governments.

Governments defend their own country's national interests in the Council of the European Union.

Setting the agenda

The European Council sets the EU's overall political direction – but has no powers to pass laws. Led by its President – currently Donald Tusk – and comprising national heads of state or government and the President of the Commission, it meets for a few days at a time at least twice every 6 months. Law-making There are 3 main institutions involved in EU legislation:

The European Parliament, which represents the EU’s citizens and is directly elected by them;

The Council of the European Union, which represents the governments of the individual member countries. The Presidency of the Council is shared by the member states on a rotating basis.

The European Commission, which represents the interests of the Union as a whole. Together, these three institutions produce through the "Ordinary Legislative Procedure" (ex "co-decision") the policies and laws that apply throughout the EU. In principle, the Commission proposes new laws, and the Parliament and Council adopt them. The Commission and the member countries then implement them, and the Commission ensures that the laws are properly applied and implemented.

Objectives of the EU The Union’s objectives can be read in the Lisbon Treaty Art. 3 TEU and include, among others:

the promotion of peace and the well-being of the Union´s citizens an area of freedom, security and justice without internal frontiers sustainable development based on balanced economic growth and social justice a social market economy - highly competitive and aiming at full employment and

social progress a free single market

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The Union shall also combat social exclusion and discrimination and promote social justice and protection, equality between women and men, solidarity between generations and the protection of children’s' rights. The European Union also establishes a set of values in Article 2 TEU. The EU Court can take values and aims into account when it decides on case law.

Timeline of European Union:

Money and the EU The EU budget is funded from sources including a percentage of each member country's

gross national income. It is spent on efforts as diverse as raising the standard of living in

poorer regions and ensuring food safety. The euro is the common currency of most EU

countries.

How is the EU funded?

The EU obtains revenue not only from contributions from member countries but also from

import duties on products from outside the EU and a percentage of the value-added tax

levied by each country.

How is the EU budget spent?

The EU budget pays for a vast array of activities from rural development and environmental

protection to protection of external borders and promotion of human rights. The

Commission, Council and Parliament all have a say in how big the budget is and how it is

allocated. But the Commission and EU countries are responsible for the actual spending.

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The Economic and Financial Crisis

The economic crisis has prompted intense and

sustained action by the EU's national

governments, the European Central Bank and the

Commission since it erupted worldwide in 2008.

All have been working closely together to support

growth and employment, protect savings,

maintain a flow of affordable credit for businesses

and households, ensure financial stability, and put

in place a better governance system for the future.

THE EURO The euro – used every day by some 338.6 million

Europeans – is the most tangible proof of

cooperation between EU countries. Its benefits are

immediately obvious to anyone travelling abroad or shopping online on websites based in

another EU country.

Purpose of the euro: A single currency offers many advantages, such as eliminating fluctuating exchange rates

and exchange costs. Because it is easier for companies to conduct cross-border trade and

the economy is more stable, the economy grows and consumers have more choice. A

common currency also encourages people to travel and shop in other countries. At global

level, the euro gives the EU more clout, as it is the second most important international

currency after the US dollar.

THE ADVANTAGES As a member of the EU, you will be able to enjoy the following advantages:

1. Low prices of goods – there exists a ‘Single Market’ for all member countries wherein

products are low-priced and there are no charges when it comes to custom tax; custom tax

is usually charged when goods are transported or sold between states/countries but this is

not applied among member countries

2. Citizens are free to move from one member country to another – citizens can freely

travel, study, work, or live in any European country of their choice

3. More jobs are generated – more or less than 3.5 million jobs have been generated over

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the years

4. Development of deprived regions – some member countries of the EU are economically

deprived and through the ‘European Structural Funds’, deprived regions are developed

5. Louder voice – the EU is able to ensure that all their concerns are taken seriously and

heard internationally since it speaks in behalf of millions of people

6. Workers are protected – this is made possible through the European Working Time

Directive; the directive includes regulations regarding holidays, working hours, breaks, etc.

THE DISADVANTAGES

If there are benefits to being a member of the EU, there are also disadvantages, and it

includes the following:

1. It is costly to be a member of the EU – different sources claim that the cost per head

ranges from £300 to £873

2. Not all policies are efficient – a good example is that of the Common Agricultural Policy

which resulted to oversupply and higher prices of goods

3. The ‘single currency’ poses a great problem – not all member countries are using the

Euro though the EU emphasized its use; still, many problems have risen over the years

4. Overcrowding – it was mentioned earlier that the citizens of member countries are free

to move from one place to another; this has led to overcrowding in the major cities of UK

and it has increased prices of houses, as well as congestion on the roads

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NORTH AMERICAN FREE TRADE AGREEMENT

Introduction NAFTA stands for North American Free Trade Agreement NAFTA is an agreement sign by the three

countries Canada, Mexico and the United states, which enforces some rules based on the trade

block in North America. The agreement was brought on January 1, 1994. It outdated the Canada-

United States free trade agreement between the

U.S and the Canada.

NAFTA revolutionized trade and investment in the

north region, helping to unravel their region's

economic potential.

This stimulated economic growth and created

higher paying jobs across the north American

region. Enhanced the purchasing power and choice

for north American consumers, families, farmers

and businesses.

NAFTA has delivered North America’s business with

improved access to materials, technologies,

investment capital and talent all across North America. This helped made business more economical,

both within America and around the globe.

It plays a main role in enhancing economic growth and legal certainty. Canada the US and Mexico

has worked to reinforce the competitiveness of the North American region by pursuing trade within

NAFTA's region. the Three Continues to develop trade and other regions. also Canada, Mexico and

the US share a common encounter within North American region that directly affects quality of Life.

Background During The 1990's the three nations, The US President - George Bush, The Canadian Prime Minister -

Brian Mulroney and the Mexican President Carlos Salinas, were responsible spearheading and

promoting the agreement, ceremonially signed the agreement in their respective capitals on

December 17,1992. The agreement was signed and was needed to be ratified by each nation's

legislative or parliamentary branch.

In 1994, North American Free Trade agreement (NAFTA), came into place, it systematically

eliminated most errors to trade and investment between the Canada, US and Mexico. By making a

reliable framework for investment, it shaped the environment of confidence and the steadiness

essential for long-term investment.

Chronology of Events June 10, 1990: Canada, the U.S., and Mexico agree to pursue a free trade agreement

February 5, 1991: NAFTA negotiations begin.

December 17, 1992: NAFTA is signed by leaders from Canada, the U.S., and Mexico.

August 1993: Additional side agreements on labor and the environment are negotiated.

January 1, 1994: NAFTA enters into force

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Provision NAFTA’s Goal was to eliminate barriers of trade and

investment between the U.S, Canada and Mexico.

The agreement eliminated one half of Mexico’s

export tariffs to the U.S and more than one-third of

US exports to Mexico, within 10 years of the start of

agreement, All U.S and Mexico tariffs eliminated

except for some U.S agricultural exports to Mexico

they were phased out within 15 years. Most Canada

and U.S trade were already duty free, NAFTA'S seeks

to eliminate non-tariff trade barrier and to protect

intellectual property rights of the products.

Impact NAFTA had both a positive and a negative impact; it has been measured by several economists,

where conclusions have been stated in publications such as the World Bank’s Lessons from NAFTA

for Latin America and the Caribbean, NAFTA's impact on North America and NAFTA Revisited by the

institute for international Economics.

Canada

Before the Agreement was signed most industries feared that the agreement will have a

negative effect on the states but had a positive impact. Canada benefited positive economic

as measured by GDP (Gross domestic product). In the year 2008, Canada exports to the

United States and Mexico were at $381.3 billion, and imports from NAFTA were at $245.1

billion.

Mexico Maquiladoras became the trade mark in Mexico. Other sectors benefitted from the free

trade agreement, and share of exports from non-border areas have increased in the last 5

years while the share of exports from maquiladora-border states has decreased. This has

allowed for the rapid growth of non-border metropolitan areas, such as Toluca, Leon, and

Puebla. All thee larger in population than Tijuana, Cedar Juarez and Reynosa.

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5

2008

Imports from NAFTA and Exports from Canada

Canada NAFTA

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United States With increasing U.S trade in goods and services with Canada and Mexico from $337 billion in

1993 to 1.2 trillion in 2011 the U.S Chamber of Commerce Credits NAFTA, while for sending

700,000 American manufacturing jobs to Mexico AFL-CIO blames the agreement.

Trade Balances NAFTA was $94.6 billion in 2010, with an increase of 36.4% over 2009 ($25 billion). NAFTA

accounted for a rise of 26.85 of the overall U.S. goods trade deficit in 2010. THE US service

trade surplus of $28.3 billion with NAFTA countries in 2009.

Investments The Foreign Direct Investment in NAFTA countries was upped by 8.8% through 2008 - 2009,

The FDI of Canada and Mexico in the US stock was $237.2 billion in 2009 up of 16.5% from

2008.

Jobs American minor businesses depend upon exporting their products to Canada or Mexico

under NAFTA, this trade supports nearly 140,000 small and medium sized business on the

US.

Based on Economic Policy Institute over 700,000 jobs were lost as production was shifted to

Mexico, California, Texas, Michigan and many other states with high concentrations of

manufacturing jobs were most affected by job loss due to NAFTA.

$0

$200,000,000,000

$400,000,000,000

$600,000,000,000

$800,000,000,000

$1,000,000,000,000

$1,200,000,000,000

$1,400,000,000,000

1993 2011

United States 1993-2011

1993-2011

0 0.5 1 1.5 2 2.5 3 3.5

US 2008-2009

NAFTA 2008-2009

Investments

US NAFTA

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Environment Environmental threats occurred in specific areas where government environmental policy,

infrastructure or mechanisms were unprepared for the increasing of scale production under

trade liberalization. NAFTA's measures for investment protection such as Chapter 11, and

measures against the non-tariff trade barriers threatened to discourage more vigorous

environmental policy. The most serious overall increase in pollution due to NAFTA were

found in the base metals sector, the Mexican petroleum sector and the transportation

equipment sector in the US and Mexico, but not in Canada.

Mobility of Persons During fiscal year 2006 73,880 foreign professionals (64,633 Canadians and 9,247 Mexicans)

were admitted into the US for temporary employment under NAFTA. Additionally, 17,321 of

their family members entered the U.S in the treaty national's dependent status. the number

of non-immigrants in TN status present in the U.S. at the end of the fiscal year is

approximately equal to the number of admissions during the year.

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Asia-Pacific Trade Agreement

The Asia-Pacific Trade Agreement (APTA), previously named the Bangkok Agreement, was

signed in 1975 as an initiative of ESCAP. Being the oldest preferential trade agreement

among developing countries in Asia-Pacific, APTA aims to promote economic development

through the adoption of mutually beneficial trade liberalization measures that will

contribute to intra-regional trade expansion and provides for economic integration through

coverage of merchandise

goods, services, investment

and trade facilitation.

Open to all developing

member countries, APTA is a

truly region-wide trade

agreement spanning East

and South Asia, with

potential to expand to other

sub-regions, including

Central Asia and the Pacific.

APTA is the first plurilateral agreement among the developing countries in the region to

adopt common operational procedures for certification and verification of the origin of

goods and it has the longest effective implementation period amongst the trade

agreements in the entire Asia-Pacific. Notably, APTA is the only operational trade agreement

linking China and India, two of the fastest growing markets in the world, and other major

markets such as the Republic of Korea.

The Participating States also signed and ratified the following Framework Agreements:

Framework Agreement on Trade Facilitation (15 December 2009)

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Framework Agreement on the Promotion, Protection and Liberalization of

Investment (15 December 2009)

Framework Agreement on the Promotion and Liberalization of Trade in Services (24

August 2011)

Participating states of ASTA: Currently, the following 6 Participating States are parties to APTA:

Bangladesh (original member, 1975).

China (acceded in 2001).

India (original member, 1975).

Republic of Korea (original member, 1975).

Lao People's Democratic Republic (original member, 1975).

Sri Lanka (original member, 1975).

MONGOLIA has recently concluded its bilateral negotiations on tariff concessions

with the current Participating States, and is soon to become the seventh member of

APTA. Mongolia's formal accession will take place during the fourth session of the

APTA Ministerial Council scheduled for January 2015.

Objectives:

The objectives of this Agreement are to promote economic development through a

continuous process of trade expansion among the developing member countries of ESCAP

and to further international economic co-operation through the adoption of mutually

Beneficial trade liberalization measures consistent with their respective present and future

development and trade needs.

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Principals:

The Agreement shall be governed in accordance with the following general principles:

(i) The Agreement shall be based on overall reciprocity and mutuality of advantages in such a

way as to benefit equitably all Participating States.

(ii) The principles of Transparency, National Treatment and Most-Favored Nation Treatment

shall apply to the trade relations among the Participating States;

(iii) The special needs of least developed country Participating States shall be clearly

recognized and concrete preferential measures in their favor shall be agreed upon.

Framework Agreements:

Trade Facilitation:

The Governments of the People’s Republic of Bangladesh, the People’s Republic of

China, the Republic of India, the Lao People’s Democratic Republic, the Republic of

Korea and the Democratic Socialist Republic of Sri Lanka, Participating States of the Asia-

Pacific Trade Agreement (APTA) affirming the importance of sustaining economic growth

and development in all Participating States through joint efforts in liberalizing trade and

promoting intra-APTA trade and investment flows; recognizing the growing importance

of cooperation with regard to trade facilitation for Participating States and the

negotiations on trade facilitation of the WTO’S Doha Development Agenda.

Promotion, Protection and Liberalization of

Investment:

The Governments of the People’s Republic of Bangladesh, People’s Republic of China,

Republic of India, Lao People’s Democratic Republic, Republic of Korea and Democratic

Socialist Republic of Sri Lanka, Participating States of the Asia-Pacific Trade Agreement

(APTA); affirming the importance of sustaining economic growth and development in all

Participating States through joint efforts in liberalizing trade and promoting intra-APTA

trade and investment flows; recognizing that investment is an important source of

knowledge and finance for sustaining the pace of economic, industrial, infrastructure

and technology development; further recognizing the need to take action to attract

higher and sustainable levels of investment in Participating States.

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Promotion and Liberalization of Trade in

services:

The Governments of the People’s Republic of Bangladesh, People’s Republic of China,

Republic of India, Lao People’s Democratic Republic, Republic of Korea and Democratic

Socialist Republic of Sri Lanka, Participating States of the Asia-Pacific Trade Agreement

(APTA); recognizing the growing importance of trade in services for Participating States;

affirming the importance of sustaining economic growth and development in all

Participating States through joint efforts in liberalizing trade in services and promoting

intra-APTA trade and investment flows; recognizing that economic cooperation among

Participating States will secure a liberal trading framework for trade in services which

would strengthen and enhance trade in services among them.

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South Asian Association for Regional Co-operation (SAARC):

Introduction:

The South Asian Association for Regional

Cooperation (SAARC) comprises Afghanistan,

Bangladesh, Bhutan, India, the Maldives, Nepal,

Pakistan and Sri Lanka. SAARC is a manifestation of

the determination of the peoples of South Asia to

work together towards finding solutions to their

common problems in a spirit of friendship, trust and understanding and to create an order

based on mutual respect, equity and shared benefits. The main goal of the Association is to

accelerate the process of economic and social development in member states, through joint

action in the agreed areas of cooperation.

Secretaries-General of SAARC:

Mr. Arjun Bahadur Thapa from Nepal is the

current Secretary General. The Secretary General

is assisted by eight Directors on deputation from

the Member States. The SAARC Secretariat and

Member States observe 8 December as the SAARC

Charter Day.

History:

The idea of regional cooperation in South Asia was first mooted in May 1980. The Foreign Secretaries of the seven countries met for the first time in Colombo in April 1981. The Committee of the Whole, which met in Colombo in August 1981, identified five broad areas for regional cooperation. New areas of cooperation were added in the following years. The South Asian Association for Regional Cooperation (SAARC) was established when its Charter was formally approved on 8 December 1985 by the Heads of State or Government of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. Afghanistan became a member of SAARC during the Fourteenth SAARC Summit held in Delhi, India in April 2007. Until 2009 China, Japan, Republic of Korea, USA, Iran, Mauritius, Australia, Myanmar and the European Union have joined SAARC as Observers. SAARC provides a platform for the peoples of South Asia to work together in a spirit of friendship, trust and understanding. It aims to promote the welfare of the peoples of South Asia and to improve their quality of life through accelerated economic growth, social

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progress and cultural development in the region. During the Fifteenth Summit, the Heads of State or Government emphasized the importance of maintaining the momentum through clear links of continuity between the work already underway and future activities and recognized the need for SAARC to further strengthen its focus on developing and implementing regional and sub-regional projects in the agreed areas on a priority basis. They also renewed their resolve for collective regional efforts to accelerate economic growth, social progress and cultural development and emphasized on key issues like telecommunication, energy, climate change, transport, poverty alleviation, science and technology, trade, education, food security and tourism. Cooperation in SAARC is based on respect for the five principles of sovereign equality, territorial integrity, political independence, non-interference in internal affairs of the member states and mutual benefit. Regional cooperation is seen as a complement to the bilateral and multilateral relations of SAARC Member States.

Objectives:

The objectives, principles and general provisions, as mentioned in the SAARC Charter, are as follows:

To promote the welfare of the peoples of South Asia and to improve their quality of life.

To accelerate economic growth, social progress and cultural development in the region and to provide all individuals the opportunity to live in dignity and to realize their full potentials.

To promote and strengthen collective self-reliance among the countries of South Asia.

To contribute to mutual trust, understanding and appreciation of one another's problems.

To promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields.

To strengthen cooperation with other developing countries.

To strengthen cooperation among themselves in international forums on matters of common interests.

To cooperate with international and regional organizations with similar aims and purposes.

Principles:

Cooperation within the framework of the Association is based on respect for the principles of sovereign equality, territorial integrity, political independence, non-interference in the internal affairs of other states and mutual benefit.

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Such cooperation is to complement and not to substitute bilateral or multilateral cooperation.

Such cooperation should be consistent with bilateral and multilateral obligations of the member states.

Decisions at all levels in SAARC are taken on the basis of unanimity.

Bilateral and contentious issues are excluded from its deliberations.

INSTITUTIONAL STRUCTURE:

Summits

The highest authority of the Association rests with the Heads of State or Government.

Council of Ministers

Comprising the Foreign Ministers of member states is responsible for the formulation of policies; reviewing progress; deciding on new areas of cooperation; establishing additional mechanisms as deemed necessary; and deciding on other matters of general interest to the Association. The Council meets twice a year and may also meet in extraordinary session by agreement of member states.

Standing Committee:

Comprising the Foreign Secretaries of member states is entrusted with the overall monitoring and coordination of programmes and the modalities of financing; determining inter-sectoral priorities; mobilizing regional and external resources; and identifying new areas of cooperation based on appropriate studies. It may meet as often as deemed necessary but in practice it meets twice a year and submits its reports to the Council of Ministers.

Programming Committee:

Comprising the senior officials meets prior to the Standing Committee sessions to scrutinize Secretariat Budget, finalize the Calendar of Activities and take up any other matter assigned to it by the Standing Committee.

Technical Committees:

Comprising representatives of member states, formulate programmers and prepare projects in their respective fields. They are responsible for monitoring the implementation of such activities and report to the Standing Committee. The chairmanship of each Technical Committee normally rotates among member countries in alphabetical order, every two years.

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Action Committees:

According to the SAARC Charter, there is a provision for Action Committees comprising member states concerned with implementation of projects involving more than two, but not all member states. At present, there are no such Action Committees.

FINANCIAL ARRANGEMENTS IN SAARC:

Member states make provision in their respective national budgets, for financing activities and programmes under the SAARC framework including contributions to the Secretariat budget and that of the regional institutions. The financial provision thus made is announced annually, at the meeting of the Standing Committee.

The annual budget of the Secretariat, both for capital as well as recurrent expenditure, is shared by member states on the basis of an agreed formula. The initial cost of the main building of the Secretariat, together with all facilities and equipment, as well as that of the annex building completed in 1993 has been met by the host government.

A minimum of forty percent of the institutional cost of regional institutions is borne by the respective host government and the balance is shared by all member states, according to an agreed formula. Capital expenditure of regional institutions which includes physical infrastructure, furnishing, machines, equipment etc. are normally borne by the respective host government. Programme expenditure of regional institutions is also shared by member states, according to the agreed formula.

In the case of activities under the approved Calendar, the local expenses including hospitality, within agreed limits, are borne by the host Government, while the cost of air travel is met by the sending Government.

SAARC Recognized Bodies:

As an organization, SAARC mainly operates through six apex bodies which ensure regional

cooperation on multiple levels:

SAARC Chamber of Commerce & Industry (SCCI): The entity encourages intra-regional trade

by creating business linkages among the entrepreneurs. Its primary focus is on the holistic

growth of service sector and small & medium enterprises.

SAARCLAW (South Asian Association for Regional Cooperation in Law): The desire to

establish an association within the SAARC region “to disseminate information” and

“promote an understanding of the concerns and developments” prompted the birth of

SAARCLAW in 1991. This association of legal communities of SAARC nations was established

in Colombo.

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South Asian Federation of Accountants (SAFA): In 1984, this organization came into

existence with an objective of strengthening and serving the accountancy profession in the

South Asian Region.

South Asia Foundation (SAF): A non-profit and non-political organization founded by

UNESCO Goodwill Ambassador Madanjeet Singh in 2000, SAF encourages regional

cooperation through UNESCO Madanjeet Singh Institutions of Excellence. The institutions

offer courses on varied subjects ranging from Climate and Green Energy to Human Rights

and Visual Arts.

South Asia Initiative to End Violence Against Children (SAIEVAC): Founded in 2005, this

regional forum aims at “ending all forms of violence against children in South Asia.”

Foundation of SAARC Writers and Literature (FOSWAL): It’s the first non-government

organization working towards nurturing and strengthening cultural connectivity through

interactions among SAARC nations.

SAFTA:

In a landmark move, SAARC nations unanimously decided to form South Asian Free Trade

Area (SAFTA). Although the agreement was reached at the 12th SAARC summit in 2004, it

came into force on 1 January 2006. The agreement not only created a free trade area of 1.8

billion people in SAARC nations (except Afghanistan), but also removed trade barriers to

increase the level of economic cooperation.

SAARC Secretariat:

The SAARC Secretariat in Kathmandu (Nepal) facilitates and monitors implementation of

activities of the organization and acts as a communication channel between SAARC and its

member states. Presently, the Secretariat is headed by Nepal’s ex-foreign secretary – Arjun

Bahadur Thapa.

Achievements & Criticism of SAARC:

According to the declaration of the 16thSAARC Summit (April 2010), SAARC’s “scope and

substance of cooperation had expanded to diverse fields.” The SAARC Summits have indeed

created a platform for closed-door bilateral talks exclusive to the participating nations.

These meetings have somewhat led to the progress in regional cooperation.

The scope of regional cooperation in SAARC has proliferated, and it has started to engage

political, economic, social, cultural and other aspects in its dialogue. Even the member

nations’ interactions with the Chambers of Commerce and Industry and the corporate

sectors seem to be developing gradually.

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However, SAARC is seen as a failure by many analysts. According to observers, it has

“achieved very little” over the last three decades. Besides deteriorating regional security

environment and growth of terrorism in Pakistan and Afghanistan, inter-state disputes are

also a nagging concern for the grouping. Social and economic sectors have registered a

dismal growth, and so is the intra-regional trade.

There’s a need for India and other member states to collectively tackle challenges such as

poverty, energy crisis, and terrorism among others. India should take the centre stage and

remove the perceived mistrust and a sense of insecurity among the member nations. But

first, India and Pakistan should focus on improving bilateral ties.