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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