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International Trade and Finance

Notes such cooperation, disturbs delivery schedules and inhibits mutually advantageous business enterprises
to develop. The logistics of freight movement are fundamental for trade. SAARC’s Technical Committee
on Transport and Communication has deliberated on these issues, but on the ground progress has
been slow and inconsistent with the needs of the moment. Moreover, these deliberations have remained
largely in the official domain and the great potential of the private sector has not been provided the
right impetus.
Governments can play a very useful role in improving transport service facilities like railways, roads,
shipping and ports. The possibilities of undertaking regional projects in this vital sector through
private sector involvement are immense. There is also scope for cooperation in specific areas like
inland waterways and coastal shipping. India, the only member of SAARC sharing land/sea borders
with all the South Asian countries, has to take initiatives in upgrading these links but other regional
partners must also overcome their inhibitions and come forward, seeking inspiration from the
successful examples of Europe and NAFTA in fostering regional cooperation in this field among
countries irrespective of their size.
The region should work on developing SAARC transport infrastructure and develop trunk routes of
trade and development. It is high time that SAARC moved forward to establish an Infrastructure
Fund, took up a couple of major infrastructure projects and implemented them so well that these
would inspire confidence in SAARC’s capability to deliver. The fund should focus on the improvement
of the intra-SAARC border transport links that merit the most immediate attention. While all the
member states have to do their part to create such a fund, India as the largest of them and having
borders with all of them has a very major responsibility in the matter and must give the lead. In this
respect, attention should be given to the Indian proposal at the meeting of the Council of Ministers in
July 2004 for setting up a SAARC Infrastructure Fund for financing large collaborative projects.
New Dimensions

South Asian trade must also move more vigorously into the manufacturing and services sectors.
From primary commodities it should fan out more and more into manufacturing and services trade.
In the last two decades industrial joint ventures and transfer of technology have played a critical role
in the growth of trade in regions such as ASEAN, the EU and NAFTA. International trade in services
has also become a significant source of foreign exchange earnings. Joint ventures and technology
transfers in manufacturing and services sectors constitute a major form of cooperation between
enterprises of both developed and developing nations. SAARC states would stand much to gain by
promoting such cooperation among them. While the signing of agreements on investment promotion
and protection, avoidance of double taxation, and establishment of an Arbitration Council are
important, SAARC needs to move away from mere trade in goods, as contemplated under SAPTA, to
a new dimension of cooperation, embracing trade in services, and enhanced investment flows and
cooperation in fiscal and monetary matters.
Sectors in which Joint Ventures and technology transfers are feasible are huge. These range from
local market oriented ventures such as frozen food and fruit products to agro-based industries, textile
and leather products, rubber and plastic products, mineral based industries, metal and metal products,
chemicals, transport equipment, nonelectric machinery, electrical equipment, goods and machinery,
and energy based industries.

Towards an Economic Union
The South Asian region offers a high potential for cooperation in such services as tourism and the
hotel industry, consultancy services, services for small industry development, computer software,
joint ventures for research and development, development finance, construction industry and banking.
Taking advantage of the current foreign exchange position of the region as a whole, it would be
useful to create a SAARC Reserve Fund as a source of financing debit balances. SAARC states should
also undertake focal programs in the form of SAARC Technology Missions (SAARCTEMs) to improve
agriculture and dairy development, using biotechnology. Similarly Joint SAARC Resource Surveys
could be undertaken with a selective use of space technology and informatics to support sustainable

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