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Essay on SAARC

Essay Contents:

  1. Essay on the Introduction to SAARC
  2. Essay on the Objectives and Principles of SAARC
  3. Essay on the Organisation of SAARC
  4. Essay on the Appraisal of the SAARC
  5. Essay on the Achievements of SAARC
  6. Essay on the Problems Faced by SAARC
  7. Essay on South Asian Free Trade Area (SAFTA)

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Essay # 1. Introduction to SAARC:

This association was formed by the South Asian countries including India, Bangladesh, Pakistan, and Nepal. Bhutan, Sri Lanka and Maldives in December, 1985. Afghanistan joined as the eighth member of the Association at the 14th SAARC summit held in New Delhi in April 2007. The status of observer has been accorded to the USA, EU, China, Japan, South Korea, Iran, Australia and Myanmar.

The 16th Summit of SAARC was held in Thimpu, Bhutan in April 2010. A positive development from this meet was that eight member states arrived at an agreement on trade in services that was stated to accelerate regional collaboration in diverse areas like communications, computer and information services, air transport, health and hospitality.

The 17th SAARC Summit was held in Addu, Maldives in November 2011. This meet emphasised upon the need to intensify efforts to fully and effectively implement the South Asian Free Trade Area (SAFTA) agreement on reduction in sensitive lists as well as early resolution of non-tariff barriers. Other issues on which member countries could agree were greater flow of financial capital and intra- regional long term investment, conclusion of Regional Railway Agreement and conclusion of agreement for energy co-operation.

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The 18th SAARC Summit was held in Kathmandu, Nepal in November 2014. Although member countries re-emphasised upon the regional co-operation and collaboration, yet the necessary commitments were lacking. The only saving grace was in the field of sub-regional connectivity. In June 2015, India, Bangladesh, Bhutan and Nepal entered into an agreement to promote sub-regional road development network through these countries.

Essay # 2. Objectives and Principles of SAARC:

The SAARC has placed before it the basic goal of rapid economic and social development of the countries of the region through the optimum utilisation of the collective material and human resources.

Objectives:

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The objectives of the Association, as specified in the Article I of the Charter of the SAARC are as under:

(1) Promotion of the welfare of the people of South Asia and improvement in the quality of their life.

(2) Acceleration of economic growth, social progress and cultural development in the region and provision for all individuals the opportunity to live in dignity and to realise their full potentials.

(3) Promotion and strengthening of collective self-reliance among the countries of South Asia.

(4) Making of contribution to mutual trust, understanding and appreciation of each other’s problems.

(5) Promotion of active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields.

(6) Strengthening of co-operation with other developing countries.

(7) Strengthening of co-operation among themselves in international forums on the matters of common interest.

(8) Promotion of co-operation with international and regional organisations with similar aims and purposes.

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Principles:

The Article II of the SAARC Charter has spelled out the following principles:

(i) Co-operation within the framework of Association shall be based upon the respect for the principles of sovereign equality, territorial integrity, political independence, non-interference in the internal affairs of other states and mutual benefit.

(ii) The co-operation among the members of the Association shall not be a substitute for bilateral and multilateral co-operation but shall be complementary to them.

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(iii) The co-operation among the member nations shall not be inconsistent with bilateral and multilateral obligations.

Essay # 3. Organisation of SAARC:

The organisation of SAARC is comprised of the Summit, SAARC Secretariat, and Council of Ministers, Standing Committee, Programming Committee and Technical Committees.

The summit is the highest policy making authority of the Association constituted by the heads of all the member countries. The summit called as the council meets almost every year in member countries on a rotational basis. If even one of the heads of member states cannot attend the meeting, it is not possible to hold the meeting of the council.

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The SAARC Secretariat, co-ordinates and monitors the execution of the activities of SAARC, services the meetings and serves as the channel of communication between SAARC and other international organisations. It was set up at Kathmandu (Nepal) on January 16, 1987. The SAARC secretariat is headed by the Secretary-General, who is appointed by the Council of Ministers upon nomination by a member state on the principle of rotation in the alphabetical order for a fixed period of 3 years.

Apart from the Secretary General, the secretariat includes also eight Directors, one from each state and the general services staff. The directors are appointed by the Secretary General upon nomination by member states for a period of three years. The term of the directors can be extended, in special circumstances by another three years by The Secretary General, in consultation with the concerned member states.

Nepal bore the initial cost of the establishment of the Secretariat. The recurring expenditures on SAARC are shared among the member countries. India contributes 32 percent of the total expenditure followed by Pakistan that contributes 25 percent of it. Bangladesh, Nepal and Sri Lanka each accounts for 11 percent and Bhutan and Maldives each accounts for 5 percent of it.

There is also the Council of Ministers which is constituted by the Foreign Ministers of all the member states of SAARC. The council of ministers is entrusted with the responsibilities to formulate policies, to review progress, to decide on further areas of co-operation, to establish additional mechanisms as deemed necessary and to decide on other matters of general interest of the Association. The meeting of the Council of Ministers in held twice a year. It may have an extra-ordinary session, if all the members’ states agree to do so.

The SAARC organisaiton, in addition, includes a Standing Committee, a Programme Committee and Technical Committees. The Standing Committee is constituted by the foreign secretaries of the member states. Its responsibilities are to monitor and co­ordinate programmes, to work out modalities of their financing, to determine intersectoral priorities, and to mobilise regional and external co-operation. This committee normally meets twice a year and submits its report to the Council of Ministers.

The standing committee can institute action committees for the implementation of projects comprised of more than two member countries. All the member countries may not have the representation on it.

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In order to assist the standing committee, there is a Programme Committee comprised of senior officials. It is an adhoc body and meets prior to the sessions of the standing committee. It is entrusted with the tasks of the scrutiny of budget of the secretariat, to finalise the annual schedule of its activities, to deliberate upon any other matters assigned by the standing committee, to consider the reports of the technical committees and SAARC Regional Centres and to submit its comments to the standing committee.

There are at present 12 Technical Committees related to agriculture, rural development, environment, health, population activities, transport, communications, science and technology, tourism etc. These committees include the representatives of all member states. They prepare programmes and projects in their respective areas.

They monitor and execute the activities in their fields and submit reports to the standing committee through the Programming Committee. There is rotation of chairmanship of every technical committee among the member countries in the alphabetical order every two years.

Essay # 4. Appraisal of the SAARC:

SAARC is the trade organisation which is being structured by some very poor countries of the world primarily directed to accelerate the economic and social development of the South Asia. Four of the member countries of SAARC-Bangladesh, Bhutan, Maldives and Nepal are included in the least developed countries. Bhutan, Nepal and Afghanistan are land-locked countries. They can have access to the world market through the ports of India and Bangladesh. Pakistan is reluctant to provide transport facilities to Afghanistan.

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India’s trade with SAARC countries has gone up from $ 6.9 billion in 2005-06 to $ 19.98 billion in 2013-14. The intra-regional trade of these countries is only 5 percent of the total trade of SAARC nations. It is clear that there is much potential for expanding the intra-regional trade among these countries.

According to some studies, the potential for regional trade is to grow upto $ 120-180 billion, provided the member countries can work out a full-fledged FTA on goods and services and create necessary infrastructure and connectivity.

According to Centre for Global Trade Development (CGTD) Report, the South Asian Preferential Trading Arrangement will give access to a consumer base of over 425 million people in the middle class bracket and permit the accelerated expansion of the growing points of the economies of all the countries in the region.

With imports of India as 8 percent of her GDP, 34 percent in Sri Lanka and 17 percent in Pakistan, Bangladesh and Nepal, the intra-regional trade-creation and trade- diversion effects will certainly unfold great prospects for the development of the entire region. It is expected that the combined average growth rate of 7 percent per annum would be realised.

Essay # 5. Achievements of SAARC:

Although SAARC has remained besieged with serious political problems since its inceptions yet it could register some achievements that are as under:

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(i) Removal of Trade Restrictions:

The member countries have undertaken some steps in the direction of reducing quantitative restrictions on imports from one another and granted some measure of concessions on trade. From August 1998, India removed quantitative restrictions off about 2300 items of import from member countries.

Upto August, 2003, India had permitted concessions to Pakistan on about 370 items. Pakistan, by that time, had allowed concessions on import of about 340 items to India. The free trade agreements have been negotiated by India with Bhutan, Nepal and Sri Lanka.

(ii) Institution of Technical Committees:

In order to promote co-operation among the member countries in the fields of agriculture, rural development, environment, health, communications, science and technology, transport, tourism, education and culture, the technical committees for economic co-operation have been instituted.

(iii) Poverty-Alleviation Programme:

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SAARC has adopted the strategy of social mobilisation, decentralised agricultural development, small labour- intensive industries and human development. The priority has been given to the right to work and extension of primary education for the poor. SAARC has created a three-tier mechanism for exchange of information among member countries on poverty alleviation programme. In this connection, it has received co-operation from IBRD, UNDP and ESCAP.

(iv) SAARC Funds:

In order to render financial assistance to the member countries, SAARC has instituted two funds-South Asian Development Fund (SADF) and SAARC Japan Special Fund (SJSF). The SADF has three windows-window for identification of development project, window for institutional and human resource development and window for social and infrastructural development.

(v) SAARC Food Security:

The SAARC has set up the SAARC Food Security Board for making a periodic review of the food situation in the region. A reserve of 2.42 lakh tonnes of foodgrains has been created to tide over any emergency in the member states. SAARC expressed its intention to set up regional food bank to meet shortages and losses caused by natural calamities such as floods and droughts at the 14th SAARC summit held in New Delhi in April, 2007.

(vi) SAARC Chamber of Commerce and Industry:

A SAARC Chamber of Commerce and Industry (SCCI) have been instituted with its headquarters in Karachi. It has the aim to promote trade and interaction of chambers of commerce and industry of seven member countries, to organise trade fairs and to negotiate with other trade organisations for the expansion of intra-regional trade. The SCCI has played an important role in the formation of SAPTA and promoting economic and trade co-operation in the region.

(vii) SAARC Agricultural Information Centre (SAIC):

It was established in 1998 and acts as a central information institution on agriculture-related activities like forestry, fishery, rice, potato, live­stock etc. It assists in the exchange of information among the seven member countries also about R & D activities. The information about research and experiments related to agriculture is published by SAIC and distributed among the member nations.

(viii) Agreements with International Organisations:

For facilitating the social and economic development of SAARC countries, the memorandum of understanding have been signed with various international organisations including UNCTAD, UNDP, UNDCP, ESCAP, ITU and Asia Pacific Telecommunity (APT) etc.

(ix) Formation of South Asian Growth Quadrangle (SAGQ):

In early 2000, India, Bhutan, Nepal and Bangladesh formed the South Asian Growth Quadrangle with the aim of the development of Nepal, Bhutan, Bangladesh and Eastern India and the basin of the rivers Ganga, Meghna and Brahmaputra. The countries of this area will co­operate in the fields of multi-nodal transport and telecommunications, effective use of tourism, protection from environmental hazards and increase in trade and investments.

(x) Bilateral Free Trade Agreements:

In order to move towards the creation of South Asian Free Trade Area (SAFTA), some of the countries of the region have forged the bilateral free trade area agreements. A major development in this regard has been the signing of the agreement between India and Sri Lanka on December 28, 1998. Under this agreement, India shall permit the import of 1000 items on zero duty from Sri Lanka and the latter shall permit the duty free import of 900 items. Similar agreements have also been forged by India also with Bhutan and Nepal.

Essay # 6. Problems Faced by SAARC:

Although SAARC has attempted to move forward over the years, yet it has been faced with very serious problems and so far it has not been able to play its assigned role.

These problems are as under:

(i) Political, Ethnic and Religions Disputes:

The major barrier to the co-operation among the member countries of SAARC has been long-drawn political, ethnic and religious disputes among the member countries. Pakistan has been insisting over the years that co-operation in trade and other matters of social and economic development, cannot be possible unless India hands over its state of Jammu & Kashmir to it.

(ii) Lack of Complementarity:

The member countries of SAARC mostly produce same type of products. The successful integration requires dissimilarity in production rather than similarity. Lack of complementarity in the economies of these countries is having restrictive effect upon the co­operation among them.

(iii) Preference to Trade with Hard Currency Areas:

Some of the member countries of SAARC prefer to enlarge their exports to hard currency areas. As a result, the promotion of intra-regional trade among the SAARC countries has remained generally neglected.

(iv) Deficit in Balance of Payments:

The countries of SAARC including India are faced with the problem of persistent BOP deficit and consequent shortage of foreign exchange. They generally have an inclination to restrict imports and impose tariff and other restrictions rather than abolishing them.

(v) Competition among Themselves:

There is competition among some of the member countries in the export of certain products in the international market. For instance, India and Sri Lanka compete in respect of tea. India and Pakistan do so in respect of textiles and clothing. There is competition between India and Bangladesh in respect of Jute and textiles. Such a state of affairs tends to discourage co-operation among them.

(vi) Infra-Structural Inadequacies:

There is a lack of proper development of transport, communications, institutional arrangements as well as payment and clearing arrangements in the region. That is a major impediment in the expansion of intra-regional trade among the member countries.

(vii) Big Brother Complex:

In view of large geographical area and natural, financial, technical and manpower resources, the countries like Pakistan and Bangladesh look at India as big brother who will over-swamp their markets with her products. India is conscious of such complex among the member countries of SAARC and has been constrained from extending fuller co-operation in the economic and social development of other countries of the region.

(viii) Low Intra-Regional Investment:

The member countries of SAARC look to the West and international lending agencies for capital resources and are afraid of seeking investments from India due to irrational reasons. The intra-regional investment is only 1 percent of total investment in the region.

In contrast, 43 percent of ASEAN investment and 64 percent of EU investment is intra-regional. The increase in intra-regional investment by the investors of the member countries will certainly enhance greater co-operation among member countries of SAARC in the diverse areas.

(ix) Bilateral Preferential Arrangements:

Some member countries of SAARC have entered into bilateral agreements with one another for extending trade concessions. In some cases, these concessions are even more than those assured under SAPTA. Consequently, there is no added attraction for member countries to await indefinitely the outcome of SAPTA.

(x) Product by Product Approach:

The lack of progress in SAARC negotiations so far has been on account of the product by product approach of the member countries in the matter of granting trade concessions. Some of the products included in the lists for trade concessions are actually not traded among the member countries.

The move towards the creation of South Asian Free Trade Area (SAFTA) can make headway only if the countries adopt a more wide sector-based rather than product-based approach in the extension of trade concessions.

(xi) Transport Problems:

Even though there is technical committee on transport, created by the member countries, yet the transport facilities are still less developed. The transit duties are also quite high. It is a major impediment in the creation of SAFTA.

(xii) Trade Barriers:

Despite the protracted trade negotiations among the member countries, there are still high tariffs on several commodities. Pakistan and Bangladesh impose VAT on all imported goods. All the member countries continue to levy non-tariff barriers such- as quantitative restrictions, restrictive licenses etc.

Pakistan has not yet granted Most Favoured Nation (MFN) status to India, despite the fact that it was obligatory to do so under the WTO Agreement by the year 2005. Unless the countries become willing to dismantle the trade barriers, the avowed goal of creating SAFTA will remain a mirage.

Essay # 7. South Asian Free Trade Area (SAFTA):

A major breakthrough has been, however, achieved by the SAARC countries at their 12th Summit held at Islamabad (Pakistan) between 4th to 6th January, 2004. The member countries signed an agreement to create South Asian Free Trade Area (SAFTA) with effect from January 1, 2006.

After the ratification of SAFTA agreement it became operational on July 1, 2006. This agreement stipulated that all the trade barriers between the member countries would be removed by 2016. For the tariff phase-out, the applied rate of customs duty applicable on January 1, 2000 would be taken as base. India applied duty reduction with the average reduction standing at 5 percentage points per year for most of the products covered under the peak duty rate.

The member countries agreed to issue notification related to the ‘negative lists’ or ‘sensitive lists’. They contained the products which were not open for tariff concessions. As per the negative lists announced by the countries, Nepal had 1310 items, Bangladesh 1254 items, Pakistan 1183 items, Sri Lanka 1065, India 884, Maldives 671 and Bhutan 157 items on that list.

The ‘sensitive list’ prepared by India includes, agricultural products, textiles, chemicals, leather and the products reserved for small scale industries. The least developed countries, like Bangladesh would be allowed to export some of those items to India under concessional terms.

Under the SAFTA agreement, the member countries will accord ‘Most Favoured Nation’ (MFN) status to one another. Pakistan has adopted a negative attitude as it refused MFN status to India, unless the political issue of Kashmir is settled in favour of that country. Despite that attitude, India decided to give MFN status to Pakistan. Pakistan is still hesitant in according the MFN status to India.

There is assurance from that country to comply with this regulation by the close of 2012. Meanwhile India has declared a negative list for trade with that country. It means Pakistan can import over 5600 items from India. In March 2012, Pakistan too declared the negative list for trade with India. Under that declaration, all products except 1209 items could be imported by India from that country. Thus there seems to be at last some light at the end of dark tunnel.

SAFTA has also made the provision for compensating LDC’s for the national import duty loss they may suffer on account of tariff cuts. It will benefit Bangladesh, Nepal, Bhutan and Maldives. The compensation would be subject to a cap of 1 percent in the first and second year, 5 percent in the third year and 3 percent in the fourth year, with customs revenues collected on non-sensitive items under bilateral trade in 2000 as the base.

Although compensation would be available to less developed countries for four years, Maldives will have the benefit for additional two years.

If SAFTA is implemented as it was intended to be, it can realise the full potential of trade among the member countries of this organisation.

The progress of SAARC is very disappointing. Despite the region being afflicted by terrorism, the member countries have failed to create a system of intelligence sharing. There is no co-ordination on counter-terrorism. Convention on legal assistance was although signed in August 2008, yet it has not been ratified by any member country. The implementation of SAPTA and SAFTA has been so far only half-hearted.