Home Contact Us  
   

India & the World - Articles

Print Bookmark Email Facebook Subscribe
#4734, 11 November 2014
 

Regional Economy

18th SAARC Summit: An Economic Agenda
Amita Batra
Professor of Economics, Centre for South Asian Studies, School of International Studies, JNU
 

The 18th SAARC summit is scheduled to be held in Kathmandu, Nepal, in a little less than three weeks from now. The theme of the summit is ‘deeper integration for peace and prosperity’.  Deeper integration, in addition to the creation of a free trade area, entails liberalisation of services, investment, elimination of non-tariff barriers, and in general, going beyond traditional market access issues.

The theme is appropriately timed, given that the neighbouring ASEAN bloc is expected to achieve the formulation of an economic community by 2015 and the larger region of the ASEAN+3 (China, Japan, Korea) +3 (Australia, New Zealand, India) is negotiating a Comprehensive Economic Partnership Agreement (CEPA), also to be finalised by 2015. Compelling regional forces therefore exist for South Asia to accelerate towards deeper integration. 

What could be a possible agenda for the SAARC to take forward the idea of deeper integration in South Asia? 

First, evaluate the South Asian Free Trade Agreement (SAFTA) for its continued relevance in the region. There are overlapping trade agreements and unilateral policy announcements among member countries that undermine the regional agreement. The bilateral agreement between India and Sri Lanka is operating successfully with both sides desirous of its elevation to a CEPA. India has a preferential trade agreement with Afghanistan, and trade treaties operating like de facto free trade agreements with Bhutan and Nepal. Exports of all Least Developed Countries (LDCs) are allowed to enter India free of duty and quota restrictions.

A major proportion of regional trade is thus covered by preferential terms of trade, independent of the SAFTA. India-Pakistan trade will remain below potential as a natural outcome of traders’ risk-return calculations in an atmosphere of constant friction, and Pakistan’s continued hesitation to grant India the Most Favoured Nation (MFN) status (euphemistically termed as Non Discriminatory Market Access). Eight years of implementation of the SAFTA have not led to intra-regional trade expanding beyond 6 per cent of the region’s total trade.

The 2010 SAARC Agreement on Trade in Services (SATIS) has made less than impressive progress. Resource-constrained South Asian economies must therefore make future calculations with due recognition of existing conditions and past performance of regional agreements.

Second, focus on factors that could facilitate trade in South Asia. An aspect that has drawn relatively less attention but is of critical importance is the lack of financial connectivity in the region. As banking channels are limited in many areas, financial support measures for trade capacity build-up could be of major assistance. Local currency swap arrangements, with assistance from central banks for settling payments in local currencies of cross-border charges and fee for cross-border movement of goods could be a feasible option in the near future. India and Bhutan signed a currency swap arrangement whereby the Royal Monetary Authority of Bhutan (RMAB) is enabled to make withdrawals of US dollars, Euros or Indian rupees in multiple tranches up to a maximum of $100 million or its equivalent.

In 2012, the Reserve Bank of India (RBI) announced it would offer swap facilities aggregating $2 billion in both foreign currencies and Indian rupees to SAARC member countries for a three-year period to help bring financial stability in the region. However, these swaps are denominated in dollars and earmarked only as a line of reserve for partner countries during a balance-of-payment crisis and not for enabling trade payment. India’s Exim Bank could also extend operations in context-suitable trade finance instruments, provide export credit insurance and undertake risk assessment of small producers and exporters. Countries could also evolve ways and means of joint information access and exchange for better risk assessment of individual traders and general financial environment.

Lack of financial connectivity is a particularly severe constraint for border trade that therefore remains confined to a limited number of commodities and barter systems.  Border regions and communities are amongst the poorest in South Asia. Setting up a regional fund or a bilateral fund for border trade could be taken up for consideration at the SAARC summit. Trade finance could help border regions develop in a manner such that they become channels of absorbing and transmitting economic dynamism of neighbouring countries rather than being solely dependent on the their own countries.

The last item on my agenda for the upcoming SAARC summit is to review the involvement of the nine SAARC observer nations. Do we share a common agenda? Could we involve these states to strengthen the regional voice at international fora? There must be a broader vision to utilise the expertise of these nations to build a more substantive association on a regional basis – given that some of these observer nations are our co- participants in emerging regional economic formulations – as also their expertise in achieving peaceful co-existence via economic integration in their respective regions.

Print Bookmark Email Facebook Subscribe
IPCS Columnists
Af-Pak Diary
D Suba Chandran
Resetting Kabul-Islamabad Relations: Three Key Issues
Can Pakistan Reset its Relations with Afghanistan?
The New Afghanistan: Four Major Challenges for President Ghani
Big Picture
Prof Varun Sahni
Understanding Democracy and Diversity in J&K
When Xi Met Modi: Juxtaposing China and India
Pakistan?s Tactical Nuclear Weapons: The Inevitability of Instability

Dateline Colombo

Asanga Abeyagoonasekera.
Sri Lanka: Moving Towards a Higher Collective Outcome
The Importance of Electing the Best to our Nation's Parliament
Sri Lanka: Toward a Diaspora Re-Engagement Plan
Dateline Islamabad
Salma Malik
Pakistan's Hurt Locker: What Next?
IPCS Forecast: Pakistan in 2015
India-Pakistan Relations in 2015: Through a Looking Glass
 
Dhaka Discourse
Prof Delwar Hossain
IPCS Forecast: Bangladesh in 2015
18th SAARC Summit: A Perspective from Bangladesh
Bangladesh in Global Forums: Diplomacy vs. Domestic Politics
Eagle Eye
Prof Chintamani Mahapatra
India-US: Significance of the Second Modi-Obama Meet
Has President Obama Turned Lame Duck?
Modi-Obama Summit: Criticism for Criticism?s Sake?

East Asia Compass
Dr Sandip Mishra
India-Japan-US Trilateral: India?s Policy for the Indo-Pacific
China-South Korea Ties: Implications for the US Pivot to Asia
Many ?Pivots to Asia?: What Does It Mean For Regional Stability?
Himalayan Frontier
Pramod Jaiswal
Nepal?s New Constitution: Instrument towards Peace or Catalyst to Conflict?
IPCS Forecast: Nepal in 2015
Constitution-making: Will Nepal Miss its Second Deadline?

Indo-Pacific
Prof Shankari Sundararaman
IPCS Forecast: Southeast Asia in 2015
Indonesia's Pacific Identity: What Jakarta Must Do in West Papua
Modi in Myanmar: From ?Look East? to ?Act East?
Indus-tan
Sushant Sareen
IPCS Forecast: Pakistan in 2015
Islamic State: Prospects in Pakistan
Pakistan: The Futility of Internationalising Kashmir

Looking East
Wasbir Hussain
Myanmar in New Delhi's Naga Riddle
China: ?Peaceful? Display of Military Might
Naga Peace Accord: Need to Reserve Euphoria
Maritime Matters
Vijay Sakhuja
Indian Ocean: Modi on a Maritime Pilgrimage
Indian Ocean: Exploring Maritime Domain Awareness
IPCS Forecast: The Indian Ocean in 2015

Nuke Street
Amb Sheelkant Sharma
US-Russia and Global Nuclear Security: Under a Frosty Spell?
India's Nuclear Capable Cruise Missile: The Nirbhay Test
India-Australia Nuclear Agreement: Bespeaking of a New Age
Red Affairs
Bibhu Prasad
Countering Left Wing Extremism: Failures within Successes
Return of the Native: CPI-Maoist in Kerala
The Rising Civilian Costs of the State-Vs-Extremists Conflict

Regional Economy
Amita Batra
India and the APEC
IPCS Forecast: South Asian Regional Integration
South Asia: Rupee Regionalisation and Intra-regional Trade Enhancement
South Asian Dialectic
PR Chari
Resuming the Indo-Pak Dialogue: Evolving a New Focus
Defence Management in India: An Agenda for Parrikar
Pakistani Taliban and Al Qaeda in Afghanistan: Implications for Asian Security

Spotlight West Asia
Amb Ranjit Gupta
Prime Minister Modi Finally Begins His Interaction with West Asia*
A Potential Indian Role in West Asia?
US-GCC Summit: More Hype than Substance
Strategic Space
Manpreet Sethi
India-Russia Nuclear Vision Statement: See that it Delivers
Global Nuclear Disarmament: The Humanitarian Consequences Route
Nasr: Dangers of Pakistan's Short Range Ballistic Missile

The Strategist
Vice Admiral Vijay Shankar
Jihadi Aggression and Nuclear Deterrence
The Blight of Ambiguity
Falun Gong: The Fear Within


OTHER REGULAR contributors
Gurmeet Kanwal
Harun ur Rashid
N Manoharan
Wasbir Hussain
Rana Banerji
N Manoharan

Ruhee Neog
Teshu Singh
Aparupa Bhattacherjee
Roomana Hukil
Aparupa Bhattacherjee


 
Related Articles
Amita Batra,
"Regional Economic Architecture: Is India Ready?," 20 October 2014

Browse by Publications

Commentaries 
Issue Briefs 
Special Reports 
Research Papers 
Seminar Reports 
Conference Reports 

Browse by Region/Countries

East Asia 
South Asia 
Southeast Asia 
US & South Asia 
China 
Myanmar 
Afghanistan 
Iran 
Pakistan 
India 
J&K  

Browse by Issues

India & the world  
Indo-Pak 
Military 
Terrorism 
Naxalite Violence 
Nuclear 
Suicide Terrorism 
Peace & Conflict Database 
Article by same Author
Pakistan’s Economy: Significance of MSCI Elevation and FTSE Inclusion

Trump's Trade Scenarios: Implications for India

G20 Summit 2016: A Lost Opportunity?

GST: Facilitating India’s Domestic, Regional and Global Integration

Brexit Consequences: Complexities and Uncertainties

Changing Regional Contours and Imperatives for India

India and the APEC

IPCS Forecast: South Asian Regional Integration

South Asia: Rupee Regionalisation and Intra-regional Trade Enhancement

Regional Economic Architecture: Is India Ready?

ADD TO:
Blink
Del.icio.us
Digg
Furl
Google
Simpy
Spurl
Y! MyWeb
Facebook
 
Print Bookmark Email Facebook Subscribe
Year 2017
 January  February  March  April
 2016  2015  2014  2013  2012  2011  2010  2009
 2008  2007  2006  2005  2004  2003  2002  2001
 2000  1999  1998  1997
 
 

The Institute of Peace and Conflict Studies (IPCS) is the premier South Asian think tank which conducts independent research on and provides an in depth analysis of conventional and non-conventional issues related to national and South Asian security including nuclear issues, disarmament, non-proliferation, weapons of mass destruction, the war on terrorism, counter terrorism , strategies security sector reforms, and armed conflict and peace processes in the region.

For those in South Asia and elsewhere, the IPCS website provides a comprehensive analysis of the happenings within India with a special focus on Jammu and Kashmir and Naxalite Violence. Our research promotes greater understanding of India's foreign policy especially India-China relations, India's relations with SAARC countries and South East Asia.

Through close interaction with leading strategic thinkers, former members of the Indian Administrative Service, the Foreign Service and the three wings of the Armed Forces - the Indian Army, Indian Navy, and Indian Air Force, - the academic community as well as the media, the IPCS has contributed considerably to the strategic discourse in India.

 
Subscribe to Newswire | Site Map
18, Link Road, Jungpura Extension, New Delhi 110014, INDIA.

Tel: 91-11-4100-1902    Email: officemail@ipcs.org

© Copyright 2017, Institute of Peace and Conflict Studies.