A view of SAFTA
Presently, the seven members of SAARC have very insignificant trade among themselves. Intra-region trade is less than five per cent of their international trade. But with the free trade area in place, the same could fairly soon increase to some 60 per cent of their total external trade. Therefore, the South Asian Freed Trade Agreement ( SAFTA) has real prospects of boosting the regional trade, collectively and individually.
However, important questions remain unanswered also such as how much of the expected 60 per cent increase in trade volumes would go to the bigger or more powerful entities in the SAARC area and how much to the smaller and weaker ones. If the trade increases in the main go mainly to the two heavyweights in SAARC -- India and Pakistan -- then the operation of SAFTA will likely be of little positive consequences for the smaller countries including Bangladesh.
India and Pakistan with their much stronger economic bases are certain to reap huge advantages the moment trade barriers would be lifted in the region. They would be in a position to increase their exports manifold to the smaller SAARC countries but the latter might not be in a position to reciprocate because even under free trade arrangements many of their goods will not be competitive in the markets of SAARC's two bigger countries.
Therefore, the free trade zone will make sense and will fetch reasonable 'equitable' benefits to all when the competitiveness or the export capacities of the smaller countries have reasonably improved to provide a level playing field for them as well.
The leaders of SAARC should take comfort from the knowledge that the European Union (EC), the most successful case of regional economic association and cooperation, has not come to its present state in a short period of time. It progressed over half a century through painstaking negotiations between its members to ensure collective benefit for all. SAARC must necessarily also travel in a similar path.