The vast untapped potential of SAARC
All eyes are now focused on the thirteenth summit of the South Asian Association for Regional Cooperation (SAARC) to be held in Dhaka between November 12 and 13. The SAARC was founded some two decades ago but it has remained limited more to trappings than progressing towards its initial declared objectives of mainly regional economic cooperation to help the region's teeming millions to conquer their poverty conditions.
But the slow progress of the SAARC ought not to prematurely turn off interest in this very promising organisation for regional cooperation. The European Union (EU) which is regarded as the most successful example of regional cooperation body in the world took about 60 years to come to its present state to be able to deliver the envisioned benefits to its constituent members. The SAARC, by comparison, has not done too poorly. Its first two decades may be considered as the teething stages of this regional body. It was spent on overcoming traditional mindsets, fears, deep seated prejudices and acrimonious bilateral relations that existed between some of the member countries of the SAARC.
It is an overstatement to say that the bilateral issues of conflict are substantially a matter of the past in the SAARC. But it would be also objective to say that countries have moderated their conflicting positions, the Indo-Pak thaw over Kashmir is an example, and they are more acutely conscious than ever before that some form of effective cooperation and collaboration between them can be so much beneficial to all of them in all respects.
This singular rising consciousness is the most promising aspect of the SAARC and will likely accelerate concrete developments under the organisation in the near future.
Besides, apart from economic cooperation and integration as its main goals, the players in the SAARC are also realising how profoundly and well it can be of use to them in affording mutual security and hastening positive developments in other areas which may not have direct bearing on their economies but may have indirect economic implications.
The whole world is now seized by the concept of finding bigger and bigger markets. The traditional view of the national market is found too narrow to permit unrestricted flourishment of enterprise and economic growth.
Thus, a producer who produces only for the local market has a limited future whereas one who produces for the bigger transnational market is seen as having a more prosperous future for it is possible for him to increase the number of his clients from selling in a much bigger market.
Only frameworks for regional organisations like the SAARC can facilitate such increased cross-border transactions of goods and, in the process, can substantially increase mobilisation of capital, entrepreneurship and production and distribution activities in the individual countries which in turn will increase employment and income generation as well as economic growth in these countries.
The wider appeal of bigger markets outside the national territory is the wave of the future. It is imperative for the domestic businesses or national enterprises to flourish and this flourishment can be a shared one with all constituent members of a regional cooperation in a win-win situation by being able to export more and more to each other. Thus, we have witnessed President Bush's very recent visit to the South American countries to sell his idea of the Free Trade of the Americas which is but a platform to ultimately create a common trading bloc of North and South American countries to make it a formidable economic juggernaut in the European Union (EU) model.
But the SAARC is already the world's biggest block for trading in the theoretical sense. It only remains to make it a practical one as well.
The SAARC countries have a combined population which form one-fifth of entire humanity. They have a combined middle class of over 450 million people which is bigger than the combined population of the EU or North American countries. This vast body of people with good purchasing power form a huge prospective market.
The South Asian Free Trade Agreement (SAFTA) was approved in the last SAARC summit. Its operational nitty-gritties are to be sorted out. When this happens, with free trade sans tariff barriers or substantially lowered tariffs between and among the SAARC countries, then the same will lead to a tremendous boost in the individual trade of each SAARC country and this trade will be only between them.
Presently, the total trade of the SAARC countries -- between themselves -- is only 5 or 6 per cent of their total external trade whereas the same is some 28 per cent for the ASEAN countries and 66 per cent for the EU countries. With the SAFTA getting streamlined, the SAARC may experience a quantum jump in the intra-regional trade with benefits of the same accruing to its member countries.
The upcoming the SAARC summit is expected to make remarkable progress towards the formation of a South Asian Development Fund.
It may become a source of considerable funds for infrastructure building in the SAARC area in support of economic activities. The SAARC already has different platforms to tackle regional necessities from weather studies to irrigation.
It is expected to give a spur to much greater cooperation between the member countries to fight 'terrorism' jointly. The SAARC initiatives under different heads, not strictly economic in nature, are expected to become stronger in the future.