Boosting the economic integration in South Asia
Asjadul Kibria | November 14, 2017
As the 10th South Asia Economic Summit (SAES) is taking place in Kathmandu, Nepal on November 14-16, 2017, revisiting the previous efforts to push the regional economic integration in South Asia may shed some light on how well or otherwise things are moving.
The SAES platform was introduced 10 years ago in 2008 as an initiative of the active members of the South Asian civil societies. The core objective of the platform is to continuously monitor and analyse development trends in the region and push for enhanced cooperation in the region on trade, business and economy. Over the years, it has emerged as a critical discourse for stocktaking of the ongoing socio-economic development. The annual meet also offers the opportunity of reenergising ‘Track -II’ initiatives to boost regional cooperation and integration processes.
There is no doubt that Track-II initiative or Track-II diplomacy is very vibrant in South Asia while Track-I or official diplomacy has lot of shortcomings mainly due to geo-political tensions and rivalry within and between the countries of the region. It is also encouraging to see that the movers and shakers of the Track-II diplomacy in South Asia are continuing their efforts for long despite a lot of barriers.
Five leading regional think-tanks are now the main co-organisers of the annual event. These are: Centre for Policy Dialogue (CPD) in Bangladesh; South Asia Watch on Trade, Economics and Environment (SAWTEE) in Nepal; Research and Information System for Developing Countries (RIS) in India; Sustainable Development Policy Institute (SDPI) in Pakistan; and Institute of Policy Studies of Sri Lanka (IPS) in Sri Lanka. Every year, one of the organisations hosts the summit in its respective country. This year SAWTEE is hosting the summit in Kathmandu in association with Nepalese National Planning Commission and Ministry of Commerce.
The theme of this year’s summit is ‘Deepening Economic Integration for Inclusive and Sustainable Development in South Asia.’ The title itself implies that economic integration is still not deep in the region which has both the commonalities and diversities in different areas.
A large part of the discourses of the previous summits focused on economic integration in South Asia with the belief that effective integration will bring long-term benefit for the people of the region.
Despite a series of effort, the region is yet to advance significantly in the direction of regional integration. When the first SAES took place in Colombo in 2008, it discussed economic integration in the light of South Asia Free Trade Area (SAFTA). At that time, South Asian Association for Regional Cooperation (SAARC) member countries completed the first step of regional integration, the preferential market arrangement, and entered into the second step – establishing a free trade area. 10 years later, when the 10th SAES is taking place, scheduled progress in tariff elimination is yet to happen. Full tariff elimination and sensitive list reduction will take at least one more decade. So, establishing the regional customs union and then common market and finally economic union is a distant dream.
It doesn’t, however, mean that efforts to move ahead for regional integration will not be there. Pessimists, however, believe that future of the effective integration in South Asia is bleak. The most pronounced example is stagnation in the intra-regional trade. The value of intra-regional trade in SAARC actually declined to $40.32 billion in 2016 from $46.51 billion in 2015 and $ 49.35 billion in 2014. The ratio of intra-regional trade in SAARC compared to the global trade was 5.96 per cent in 2005 which came down to 5.07 per cent in 2016. Optimists, however, view the slow progress in regional integration as a normal process. They argue that even the ASEAN (Association of Southeast Asian Nations) is yet to be effectively integrated in its 50 years of journey.
The problem in the region is well known and well recognised. The political tension between India and Pakistan casts a long shadow on the whole region. Again, almost every small country in the region has geo-political and trade or economic disputes with the bigger one, India to be specific. These realities have to be taken into consideration while pushing for regional integration.
Civil societies in the region have long been working to motivate the governments of the countries to reduce the gap and address the disputes through dialogue. But the role of the civil societies sometimes comes under question mainly due to their lack of engagement with the people of the region. Moreover, some of the civil society members try to uphold the stand of their respective governments without critically examining it.
Nevertheless, advancement in regional cooperation in the last three decades is not negligible. Physical connectivity has improved among the countries. People-to-people contact has expanded. Bilateral and sub-regional efforts have increased in different areas to extend cooperation. People of the region are aware of the benefits of integration. A good number of studies have been conducted to identify the potentials and benefits of regional integration. What is needed now is effective and timely intervention of the leaders of the region. The 10th SAES will hopefully reassert the need.