The book “Promoting Economic Cooperation in South Asia: Beyond SAFTA” consists of papers and presentations made at the South Asian Economic Summit held in Colombo in 2008. The entire book is divided into four parts which present a holistic view about regional cooperation in South Asian countries.
The first part of the book consists of two chapters which deal with the framework for regional cooperation for addressing the challenges of poverty, peace and environmental degradation. The existing approach to economic growth, which is based on competitive framework for maximizing individual gains and translating the economic gains into military power and its use to assert hegemony over other states has led to large scale inequalities within the region which needs to be challenged by promoting interstate peace and development within the region and removing bottlenecks associated with it. Moreover, economic interdependence needs to be increased by engaging economies in diverse sectors like energy, education, health, environment, etc. On a regional level, at the same time, try to cash in on the already existing rich cultural traditions.
The second chapter in this part has pointed out some of the constraints in achieving the above set goals and solutions towards it. An important point that has been mentioned is about the Nepal and Afghanistan which are presently in a laggard state, used to prosper during the 18th and 19th century due to free trade and commerce with the neighbours like Central Asia, the Middle East, the Indian subcontinent and China.
The development path chosen by South Asian countries after independence was to protect the infant industries by using strong tariff measures and adoption of import substitution growth strategies till the 1980s. This model not only curbed the growth at an individual level but also hampered the already existing integrated regional economy. Other constraints include the concentration of peoples living close to border areas, these areas lag proper infrastructure, it has been intentionally done to avoid incursion from the neighbouring countries; low migration rate; absence of big firms, etc. Moreover, to gain the potential benefits of cooperation, it is important to engage countries to remove the political constraint.
Part two of the book brings out the cooperation issues in many details, it consists of 9 chapters which consider trade and trade facilitation, transport, financial and food crisis, migration and tourism. The part starts with a chapter on status and prospects which suggest the failure of SAFTA, a free trade agreement reached among South Asian nations in 2004 which was thought to integrate the entire regional economy of the South Asian countries. In the evolving dynamics of regionalism in Asia, bilateral trade is emerging faster than the trade under the SAFTA. It has been argued that the trade facilitation would be a major game-changer in the process of regional integration to achieve it, the South Asian economies need to do away with physical and nonphysical barriers to trade by investing in building both visible and nonvisible infrastructure to increase intra-trade within the economies. It suggests a need to reinvigorate new policies to make transit trade more cooperative since it has been the bone of contention between economies.
Apart from it, the ambiguity associated with regulations act as a bottleneck to any development initiatives and there is a requirement for a concerted and coordinated effort to provide clarity regarding project sites, assets, government laws and regulations, dispute resolution mechanism, etc. Further to deal with hunger, malnutrition, climate change or problems arising out of any crisis a long term effective solution with cooperation on an international scale is required. In the last chapter of this part, it has been argued that tourism in South Asian region can be used as a major income-generating activity, it will help the people living in some of the remotest areas for example in the Himalayas. The South Asian region has the key ingredients for developing the tourism industry and the Maldives has successfully used it. It argues for dedicated effort from every South Asian country in different aspects like transportation, easy arrival visa, etc. needs to be improved to gain the real benefit out of it.
In part three, the scope for different stakeholders are presented in the context of South Asian countries on an individual basis, it has aptly dealt with the different sectors whereby involvement, especially of the private sector, can bring about a major change in development. It has been argued that for Bangladesh whose major trading partner is European Union regional integration, sub-regional cooperation or a bilateral free trade agreement provides no panacea for its problems it must bring about a structural transformation through regional integration, in case of India which is a relatively advanced developing country has to initiate the process of regional integration and give favours to less developed countries. For India and Pakistan, it is important that they keep their rivalry at bay and take lead towards transforming the South Asian into a major economic block otherwise the entire region would be marginalized in the global trade. Moreover, it has been argued that there is a need for liberalization of the entire region and involvement of the private players in sectors like the development of logistics facilities and ports, involvement in policy-making related to rules of origin, shipments, etc.
Lastly, in part four of the book, which consists of two chapters on concerns related to regional trade and the complexities associated with it has been properly elucidated. In case low-income countries come together to form a regional cooperation, in general, it is largely the poor countries which has bear the loss since they had to face tough competitions both in the home market and the partner’s market and it happens largely due to trade diversion, however in case of SAARC countries given the existing trade integration the loss due to trade diversion would be lower since it happens mostly in the economy which is already interconnected.
The other cause of concerns is related to broadening of supply-side gains by exploring opportunities for preferential trade agreement by relatively advanced developing countries which lead to increased competition for the weaker economy in their home market. So, the relatively developing countries should take measures which favour the weaker economy in the region by being considerate to their export basket and removing those things from the negative list. The final chapter brings out some of the reason for the failure of SAFTA, it has been mentioned that the problems largely lies with the non-implementation of the already existing measures and dismal performance of those which has already been implemented however it has also been argued that the fact that there is a platform which brings together the major leader to the common platform is an important aspect of the SAARC.
This book has presented the arguments and concerns around SAFTA and the regional cooperation in South Asia in a comprehensive way at the same time it has suggested feasible solutions towards resolving those concerns. It will come in handy for policymakers involved in policymaking at national and international level. Given the increasing protectionist measures by the developed countries, regional cooperation becomes an important strategy to deal with it. This book has rightly pointed out the increasing bilateral trade among nations rather than a multilateral trade. Both SAFTA and SAARC can respond to many issues such as dependence. It has highlighted the liberalizations process in countries such as Sri Lanka, Pakistan, India and Bangladesh and lesser mention of other LDCs. the increasing bilateral trade deals have minimized the scope of SAFTA, which could have strengthened the regional cooperation. The book could also have looked at the relationship between aid and trade in Southeast Asia region.