The
recent summit
of SAARC head
of states was
significant from
Bangladesh's economic
perspective on
two counts. First,
the need for taking
a fast track approach
in enhancing trade
cooperation within
the region received
priority consideration
in the summit
and it was also
appreciated that
the initiative
on this had to
be taken by the
larger economic
powers of the
region. Second,
the summit also
underscored the
importance of
better transportation
links between
the member nations
as a pre-condition
for regional economic
cooperation.
While India-Pakistan
dispute has been
a major factor
behind the slow
pace of achievement
under SAARC, in
my opinion lack
of political commitment
on the part of
member nations
was by far the
most important
factor behind
this lack of progress.
Bangladesh, India
and Nepal could
achieve huge economic
benefit through
cooperation if
they could put
economic considerations
ahead of political
imperatives.
The problems involving
lack of understanding
between India
and Pakistan are
too deep-rooted
and would require
bold leadership
in both countries
that is not there.
Unfortunately,
I do not get any
sense of improvement
in the level of
understanding
between the two
countries after
the summit.
Resolving regional
dispute is a much
more difficult
task than implementing
economic cooperation.
SAARC is mandated
to do the second
and even here
our achievement
so far has been
insignificant.
Given the current
level of complementary
structure of production
in the region,
many critics argue
that SAFTA does
not hold out a
lot of prospects.
But I believe
that if free trade
is attempted in
the region with
right earnestness
a whole lot of
opportunities
will open up and
the optimal allocation
of resource that
will follow will
greatly enhance
trade and welfare
in the region.
As would have
been expected
the countries'
sensitive lists
were rather long
at the initial
stage of SAFTA
negotiations.
By now the lists
have been reduced
significantly
but still they
include many items
of export interest
for the other
member countries.
For example, India's
negative list
includes readymade
garments, which
is our potential
export item while
Bangladesh's negative
list includes
certain textile
products that
are India's export
items. Bangladesh's
potential for
export to the
region will not
be fully realized
unless items such
as pharmaceuticals,
toiletries, ceramics,
readymade garments
etc are kept outside
the negative lists.
Non-Tariff Barriers
that are extensively
used by India
remain major deterrents
to the regional
trade. Thus, for
example, India
tried to restrict
Bangladesh's export
of cement on grounds
of standards.
Similar measures
are also preventing
the export of
pharmaceuticals,
toiletries etc.
Standard testing,
need for clearance
from the central
government, underdeveloped
trade nfrastructure,
state tariff,
etc are some of
the other major
trade hindrances.
In regional trade
negotiations India
always assumed
a "conciliatory"
role on paper
but in reality
these were of
little significance,
as it was not
backed by political
commitment. But
now it appears
that there has
been a change
of heart [allowing
zero tariffs on
products that
are in its positive
list and imported
from LDCs]. Current
Indian leadership
seems to have
realized
that in the long
run it is in India's
interest to support
rapid economic
growth of her
smaller neighbors.
If market access
is granted effectively,
Bangladesh's export
to the region
will increase
significantly.
Such exportable
products include
pharmaceuticals,
ceramics, melamine,
plastic products,
toiletries, etc.
There is also
large scope for
Indian and Pakistani
investment in
Bangladesh in
basic metal and
textiles industry
with appropriate
buy back arrangements.
The SAARC member
countries should
put major emphasis
on radically improving
the transportation
link between the
member countries
with highly developed
physical and trade
infrastructure.
This itself will
contribute towards
an increase in
the flow of goods
and services across
the borders. Of
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