Page 248 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

International Trade and Finance Hitesh Jhanji, Lovely Professional University

Notes
Unit 22 : SAARC/SAPTA, ASEAN

CONTENTS
Objectives
Introduction
22.1 SAARC/SAPTA
22.2 ASEAN—INDIA
22.3 Summary
22.4 Key-Words
22.5 Review Questions
22.6 Further Readings

Objectives

After reading this Unit students will be able to:
• Know SAARC/SAPTA.
• Explain ASEAN—INDIA.
Introduction

There is a greater awareness now among the people of the region comprising SAARC that with joint
efforts, today’s knowledge economy, the enhanced purchasing power of the South Asian market
with a quarter of humanity living in it, its yet untapped hydrocarbon reserves and the rich diversity
of other resources, could yield huge dividends for its people and lend the region considerable political
weight and economic clout in a gradually emerging multipolar world. Can one transform that
awareness into the will to move ahead in that direction, fast enough to rub shoulders with other
regional entities with the necessary degree of internal harmony and strength ? That would mean
getting over problems that have beset SAARC so far.
First, there is the inadequacy of intra-SAARC trade. Without augmenting trade within the region
and region’s exports to the rest of the world, the South Asian dream of becoming a partner in Asia’s
march to the top of the economic ladder in this century is inconceivable. In Europe more than half the
exports are intra-regional. In South Asia, they are just about 5%. Even if one adds the very vague
figures of informal intra-SAARC trade to it, the figure would hardly reach 7%. The answer obviously
lies in breaking existing barriers to trade within the region.
22.1 SAARC/SAPTA

SAARC commenced the process of liberalization eight years ago when in 1995 the Organization
established the South Asian Preferential Trade Arrangement (SAPTA). During the last eight years
four rounds of negotiations have been held among the member countries, exchanging lists of items
for tariff concessions. So far more than 5000 items have been liberalized. Commendable though this
endeavour may be, its pace has been far from satisfactory. First, the lists exchanged have rarely
included items most traded bilaterally among the SAARC countries. Secondly, there have not been
across the board reductions of tariffs, the process having been too selective in character. Obviously
the liberalization process needs considerable lubrication for its wheels to move faster and more
smoothly.
Significant complementarities exist among SAARC countries apart from just those of history and
culture. There needs to be more active communication between the respective trade, business, finance
and industry of the SAARC states and particularly of India and Pakistan, the two largest among

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