As of Feb 2016, MGC has 6 member countries & 0 observers. BIMSTEC has 7 member countries & 0 observers.
But our next guest – SAARC, has 8 member countries and 9 observers (including China, US, EU, Japan).
The South Asian Association of Regional Cooperation (SAARC) completed 3 decades of its existence in 2015. While it is impossible to compressits evolution in a single post, we will do well to get you upto speed and be aware of the major controversies surrounding SAARC (analysis, analysis and more analysis).
Member countries – Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Afghanistan joined SAARC as its eighth member state in April 2007.
Observers – States with observer status include Australia, China, the European Union, Iran, Japan, Mauritius, Myanmar, South Korea and the United States
After independence, the countries of South Asia, which under British colonial rule, functioned like a composite whole that had both transport linkages and economic inter-dependence, wanted to portray a more independent image.
They began functioning as autonomous economic units with protective trade regimes for the fear of political, economic autonomy in the region. These countries were often mired in bilateral conflicts (Indo – Pak, Pak – B.Desh) and that took a toll on region’s growth and prosperity. Hence, SAARC charter was build around a common goal of improving the foreign relations within the region.
As a founding philosophy, SAARC prudently kept bilateral contentious issues out of the scope of the regional cooperation. It was believed that the inclusion of bilateral issues would hamper multilateral initiatives. SAARC was not set up as a bilateral dispute settlement mechanism. Did that really help evolve SAARC into a better organisation? We shall see.
Why do nations come together to form groupings?
Short answer – Economics & power struggle!
Long answer –
- Nepal – had difficulties with India on various issues. Harnessing Nepal’s river water was one of the key considerations. Nepal wanted to diversify technical cooperation on hydroelectricity with other countries (to avoid complete dependence on India)
- Bangladesh – Another country which was suspicious of India and wanted to diversify its foreign relations. At that time Bangladesh had serious problems with India on the issue of the sharing of the Ganga water. Even though bilateral struggles were kept outside the purview of SAARC, Bangladesh had a hope to become a major player in the region
- Sri Lanka – was initially reluctant to join SAARC. However, due to its own ethnic crisis it became interested in the association expecting it would help assuage some of its apprehensions regarding India
- Pakistan – Only one goal – counter India’s influence
- Bhutan & Afghanistan – Let’s leave them for time being!
Feel good about India’s overarching influence in the region for a moment.
What were the mandates for SAARC and how far has it come to fulfill them?
The SAARC Charter clearly lays down that cooperation among member-states will be based on sovereign equality, territorial integrity, political independence and non-interference in internal affairs.
The Charter further states that such cooperation will not be an obstacle to other bilateral or multilateral cooperation or be inconsistent with them.
Brings us back to the point that SAARC chose to keep bilateral disputes out of discussion and focus on the multilateral (economic, strategic) issues. This did not always work in its favour. Smaller member countries often found it difficult to overcome their political goals and limited national agendas. This often stalled progress.
Want to read about one such issue with SAARC?
How does SAARC carries on with its activities?
On the administration side, the SAARC Secretariat established in Kathmandu is supported by Regional Centres established in Member States. They are quite a few and not so relevant for your exam prep. Suffice to say that, SAARC members are supposed to meet every year (Annual Summits).
In the last 30 years, we have witnessed 18 summits. The last one was held at Kathmandu in 2014 and the motto was – ‘Deeper Integration for Peace and Prosperity’.
The 19th SAARC summit is to be held in Pakistan sometime in 2016.
How did the 18th Summit (2014) go?
- The theme of the summit was “Deeper Integration for peace and prosperity.” But member countries failed to sign two major agreements on rail and road connectivity
- The pact on energy was signed though! This will enable greater cooperation in the power sector
- Why were the rail and road connectivity agreements not signed? Pakistan held back, saying it still had to complete its “internal processes” regarding these pacts
- Any new initiative proposed by India?
- India promised to launch a satellite for the region by SAARC Day in 2016
- Set up a Special Purpose facility in India to finance infrastructure projects in the region
- Ease business visas by launching a SAARC business traveller card
- Suggestions for establishing a SAARC regional Supra Reference laboratory to fight common diseases (TB, HIV)
China’s intrusion into SAARC?
- Pakistan called for a more prominent role for observers in the future—mostly China
- Nepal and Sri Lanka also support this, and China itself is actively seeking a greater role in SAARC
- India responded by saying that economic cooperation between the existing members must be strengthened before expanding membership. Close shave!
Comparing ASEAN with SAARC
#1. SAARC is a lost cause – The motivation for launching these two forums – ASEAN (for south east asia) & SAARC (for south asia) were almost similar. Both were guided by a common hope to resolve disputes and a thirst for economic growth.
Asean members had serious interstate disputes which they decided to forget. On the other hand, Saarc members insisted that disputes be resolved first, before economic cooperation could start. Asean nations were inclined to be trading nations; Saarc nations were inclined to be warlike. Asean moved to conflict-avoidance mechanisms; Saarc refused to discuss bilateral disputes.
Saarc had to suffer an Indo-Pakistan war at Kargil started by Pakistan in 1999, which prevented three Saarc summits from taking place. India has given Pakistan the most favoured nation status but Pakistan has not reciprocated.
#2. It’s unfair to compare SAARC with ASEAN – The ASEAN countries did not have contested ideologies, such as the one based on two-nation theory (Indo-Pak). The countries comprising ASEAN came together to defend themselves from the communist threat. Such external threat was absent in the case of SAARC. Rather as you see above, India was considered as a threat by some member countries.
Fair enough! Let’s move to the economics of SAARC.
South Asia Free Trade Agreement (SAFTA) and the complexities surrounding it
New to FTAs/ PTAs/ trade agreements in general? Read about the different types of trade agreements.
Safta was signed by the South Asian Association of Regional Cooperation (SAARC) countries in January 2004, in Islamabad. The agreement was a migration from SAPTA to SAFTA (Preferential to Free).
India allows duty-free access to goods from Sri Lanka, Nepal, Bhutan and Bangladesh.We also reduced the ‘sensitive list’ it maintains for these countries to 25 items.
South Asian countries in general have competitive economies. The trade structure is mostly tilted towards primary goods. The countries of the region in general target their finished goods to foreign markets. Primary products are goods that are available from cultivating raw materials without a manufacturing process.
SAFTA was expected to bring down illegal trade
It was expected that SAFTA would bring much of the illegal trade in the region to the official level boosting all-round regional trade figures. Due to the lowering of tariff, many of the high custom duty items that are smuggled would become part of official trade. But that did not happen (to the satisfaction).
As reality would have it, SAFTA faces an existential dilemma
- The volume of trade in actual terms (between SAARC nations) could is very small
- Intra-regional trade is still at a dismal 5% — compared to 66% for the EU and about 25% for the ASEAN. Read more – here
- The countries of South Asia have long negative lists and their protective trade regimes inhibit free flow of goods. Negative lists = lists of items kept outside the purview of agreement
- Such obstacles and restrictions have given rise to smuggling and unofficial trade
- The ‘rule of origin’ is a problematic clause since there are no efficient mechanisms to monitor and certify goods originating from the member countries
What’s the silver lining for SAARC?
Thankfully, with India pursuing its “Act East policy” with a new vigour, all is not lost. If you have been a regular with the Civilsdaily App’s Newscards, we have been closely following Indo-SAARC updates:
If you have 20 minutes to spare, watch this RSTV sponsored discourse on 30 years of SAARC
If you have 20 minutes to spare, watch this RSTV sponsored discourse on 30 years of SAARC